Grupo México, the conglomerate controlled by billionaire German Larrea, secured a $5 billion debt package for its proposed acquisition of Banamex from Citigroup, according to a Reuters report.
The move represents an important milestone in Grupo México’s efforts to finalize the deal with Banamex, the unit that encompasses Citigroup’s assets. The transaction will value Banamex between 7 billion and 8 billionsources told the agency
Several banks, including Barclays and HSBC Holdings, have agreed to provide the debt financing, the sources said.
The sources, who requested anonymity as these talks are confidential, warned that a deal is not guaranteed and the talks could fall apart at the last minute.
Citi, Grupo México, Barclays and HSBC declined to comment.
In the last weeks, Larrea emerged as the favorite to buy Banamex against rival bidder Daniel Becker, head of Banca Mifelthe sources said. Becker had lined up international investors, including Apollo Global Management and the Abu Dhabi Investment Authority, to finance his bid for the bank.
Citi walked away from talks with Becker to prioritize a possible deal with Larrea, according to the sources. A Mifel spokesman declined to comment.
Several other potential buyers, including Mexican billionaire Carlos Slim, dropped out of the year-long process to buy the business. Banamex also attracted the interest of foreign competitors with operations in Mexico such as Banco Santander.
Citi, the US banking giant, is divesting the unit as part of CEO Jane Fraser’s efforts to sell some international operations and simplify the business.
In January, Citi’s chief financial officer, Mark Mason, said the process to divest Banamex was “very advanced,” though he declined to comment on the timing of any deal announcement.
Fraser was due to meet with Mexican President Andrés Manuel López Obrador on Wednesday, according to a presidential spokesman. Last week, a source told Reuters the Citi chief executive planned to visit Mexico this weekalong with other members of the bank’s management.
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Reuters UK-based news agency.
