Billionaire Gilinski Resigns From Attempt to Buy Grupo Argos

Bloomberg Colombian billionaire Jaime Gilinski has resigned from his efforts to buy a stake in Grupo Argos SAArgos SA as he focuses on other ways to take control of the country's most influential business group.

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The banker s effort to buy at least 26% of the cement and infrastructure conglomerate fell short when the stock exchange said Wednesday that shareholders only contributed 11% of the total. Gilinski won't buy the shares that were offered and doesn't plan to make a new bid for now, according to a person familiar with the decision who asked not to be identified discussing the plan.

Gilinski has been trying to take control of the alliance of Medellin-based businesses known as the Grupo Empresarial Antioqueno, or GEA since November. Grupo Argos is part of the GEA, a strategy of cross investments used by the company to defend itself against the type of takeover attempts made by Gilinski, along with Grupo Nutresa SA and Grupo de Inversiones Suramericana SA.

While acquiring the stake in Argos wouldn't have given him control of the GEA, the tender offer helped prompt several members of the board who were part of GEA top management to step aside, according to a person familiar with the strategy who asked not to be identified. That may make it easier to push through any attempt to take control of the company, the person said.

Gilinski has spent more than $2 billion buying stakes in Sura and Nutresa. He now owns a 31% stake in Nutresa, making him the second-largest shareholder in the food industry, and he is also the largest shareholder in Grupo Sura, with 38%, following three tender offers and additional purchases in the secondary market.

In order to take control of the GEA, Gilinski needs to increase his stake in either Grupo Sura by another 12% of outstanding shares or in Nutresa by an additional 20%, according to the second person.

Gilinski will attempt to increase his stake in either Sura or Nutresa by beginning new tender offers or making direct offers to the companies, the person said.

Daniel Guardiola, a BTG Pactual analyst, said he isn't going to stay put after throwing $2.5 billion in the pot. He will get control of all of GEA once he gets control of one of the three holding companies. The whole system will collapse like a pack of cards. When the market reopens, Grupo Argos shares will likely fall Thursday, according to Guardiola. Since Gilinski launched the bid for the company, the shares have gone up more than 5%.

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