One of Latin America’s bitterest takeover battles is heading for the courts after 14 months of hostile bids and mudslinging, in a fight pitting Colombia’s most powerful business alliance against a billionaire predator.
At stake are $20bn of choice corporate assets, the future of the Andean nation’s stock market and the probity of its government.
Billionaire Jaime Gilinski fired the opening shot in November 2021 with a bid for food manufacturer Nutresa in partnership with the Abu Dhabi royal family.
When Gilinski followed up with his own tenders to try and win control of financial conglomerate Sura and cement company Grupo Argos, it became clear that his aim was to unlock a web of cross-shareholdings protecting the trio from hostile bidders. This would give Gilinski control of assets worth more than half the country’s stock market.
Smaller shareholders and pension funds sold quickly, tempted by a large premium on share prices which had performed poorly for years. But crucial investors, including wealthy families based in Colombia’s second city Medellín, refused. That, together with the cross-shareholdings, has so far denied the bidders victory.
As the battle has intensified, allegations of improper influence, threats, lax corporate governance and biased media coverage have been flying between the Gilinskis and the trio of conglomerates, collectively known as the Grupo Empresarial Antioqueño, or GEA.
After seven bids and $2.9bn spent, Gilinski owns about 39 per cent of Sura and — together with his Abu Dhabi partners — 31.5 per cent of Nutresa. He has seats on the board of both companies but lacks a majority. The Argos bid was abandoned last July.
“At the moment, Gilinski . . . doesn’t control anything,” said Daniel Guardiola, an analyst at BTG Pactual in Bogotá. “And you don’t invest over $2.5bn not to control anything.”
Gilinski, 65, has built an empire valued at $4.2bn by Forbes, including one of Panama’s largest property developments and a stake in the UK’s Metro Bank. The GEA bids are his most audacious move yet.
Gilinski and his 35-year-old son Gabriel, who works with him, say their aim is to unlock value by dismantling the cross-shareholdings and improving returns. “The cross-shareholding structure, where managers elect each other and their boards, leads to a lack of accountability and transparency,” Gabriel argued to the Financial Times.
“This group of companies lost 80 per cent of their market value during the decade prior to the tender offers. Their combined market value went from $27bn to $7bn.”
Some Gilinski tactics have proved controversial. When the initial tenders for Nutresa and Sura failed to secure enough shares, the bidders returned weeks later with fresh ones at higher prices. Most markets would not allow this but supporters of the Gilinskis say it is legal in Colombia and regulators agree.
Sergio Galvis, Sura’s US legal adviser at Sullivan & Cromwell, commented: “In the US, it is hard to imagine someone getting away with making successive tender offers at continually increasing prices.”
Executives and shareholders in Sura allege that the Gilinskis enjoy a cosy relationship with the current and former Colombian presidents, Gustavo Petro and Iván Duque, helping them secure favourable regulatory decisions. Both denied through their offices involvement in the decisions or favouritism and the regulators said they had followed the law closely.
The Gilinskis have shot back with portrayals of an out-of-touch and pampered GEA management. “The same managers who happily rang the bell in the local stock market while issuing billions of dollars in shares mostly to local pension funds to fuel their empire-building adventures now claim the market doesn’t work,” said Gabriel Gilinski, who has a seat on the Sura board. “It is common to find entrenched management blaming other factors for their failures.”
Colombia’s news magazine Semana, owned by Gabriel Gilinski, has run stories about GEA management using corporate jets to fly to Caribbean holiday islands, triggering protests from the alliance’s management.
“One of the assets of this company is its reputation and the trust in it,” Gonzalo Pérez Rojas, Sura’s chief executive, told the FT. “You can’t destroy 77 years of history with a magazine and a few isolated attacks.” Pérez declined to comment on the specific allegations made by the Gilinskis, citing the ongoing legal cases.
However Pérez did say that Sura “acts in the long-term interests of all its shareholders and the broader stakeholder community” and vowed to “defend it from actions that run counter to our principles and the rule of law”.
Daniel Coronell, a former Semana journalist fired by Gilinski, said the Gilinskis “bought Semana magazine for $10mn and . . . have used it to praise the officials they need, such as the regulators, and to attack those who oppose them”. Those close to the Gilinskis counter that the GEA has used the Medellín newspaper El Colombiano to advance its cause.
Luis Santiago Cuartas, who resigned from the Sura board because its agenda “was constantly trampled on by a group representing the Gilinski interests” also alleged inappropriate pressure from Gabriel Gilinski: “He told me various times that I was going to be immolated . . . I felt threatened.”
Another former Sura director said Gabriel Gilinski had constantly pressured board members to sell Sura’s 35 per cent stake in Nutresa, threatening lawsuits. “He told us we would all end up penniless and in jail,” the former director told the FT.
Gabriel Gilinski declined to comment on the specific allegations but said he had always been “very clear about the fiduciary responsibilities of the Sura board to all shareholders”.
He accused GEA managers of defending their own interests instead of maximising shareholder value. “These are publicly listed companies, and cannot be run like a country club for the benefit of management and certain shareholders that own between 3 per cent and 7 per cent,” he said.
Fernando Rodas, a small shareholder in Sura who used to advise the group, has written to Colombia’s financial regulator, the Superintendencia Financiera, to question why Gilinski was allowed to keep the Sura and Nutresa bids — and the approval process — secret for months. “This is extremely unusual,” he said. “The government has compromised itself.”
Andrés Barreto, who served as Colombia’s competition regulator until August 2022, said secrecy was granted to protect the shares, the bidders and to give regulators time to consider the tenders. He said such a practice was allowed by law and had occurred before.
Those close to the GEA say that Colombia’s then-president Duque visited Abu Dhabi in November 2021 and signed an agreement with the UAE to strengthen relations only days before Gilinski launched his first tender offer. The Gilinskis were in the Gulf at the time as part of a Colombian business delegation.
Duque said in written responses to FT questions that he had learned of Gilinski’s bid for Nutresa only when it was made public and that the Gilinskis were not involved in the UAE trade talks. “I have always had good relations with Colombian business people, including with the Gilinski family,” the former president said. “I don’t work for them, nor do I have any employment or business relationship with Gabriel or Jaime Gilinski from which I earn an income.”
Multiple legal challenges have been filed. Sura and Argos have secured injunctions that the Sura board vote to sell its Nutresa stake was invalid but the prosecutor’s office is investigating allegations that the justice system was improperly influenced.
Regulators are investigating whether the GEA is acting as an “economic group”. If declared as such it would be forced to merge its constituent entities or lose the voting power of the cross-shareholdings, ceasing to exist in its current form.
However, in Colombia’s tortuous legal system, the cases could take several years to decide and some believe a negotiated settlement is more likely.
Either way, the outcome of the takeover battle will decide the future of the country’s most powerful business alliance and could make the Gilinskis the dominant players in Colombian banking. If the bid targets ended up being taken private — something the Gilinskis say will not happen — the country’s stock market would be reduced to a barely viable rump.
GEA executives recently flew to Abu Dhabi for talks with the royal families’ representatives. Amid rumours of a behind-the-scenes compromise, Sura said that it was simply an investor relations meeting.
“The battle has been changing because there are no more sellers,” said BTG Pactual’s Guardiola. “It’s now increasingly a legal battle on both sides and will probably become even more so.”
A person close to the Gilinskis says they will not give up. “The Gilinskis will go on until the end,” he said.