Grupo México to Potentially Purchase Banamex

Grupo México, one of the largest copper producers in the world and the main one in Mexico, is considering acquiring Banamex, one of the country's largest banks. The purchase would increase the company's financial capacity, boosting its mining, infrastructure and transportation operations.

Although Grupo México has not yet decided, experts say this purchase would mark a turning point for the company, as it would improve its investment and financing capacity for key projects. Moreover, the purchase would boost the company’s competitiveness and further diversify its operations, even expanding to new jurisdictions.

"It makes sense that Grupo Mexico seeks to consolidate the purchase of Citigroup's retail banking business in Mexico, not only because it has the resources to give an offer close to what Citigroup is asking for, but also because this bank will allow it to synergize with the company's mining, railroad and infrastructure projects," said Carlos Alberto Gonzalez, Director of Analysis and Stock Market Strategy, Monex.

So far, Citigroup has valued Banamex at US$12 billion. However, the offers received, including Grupo Mifel's, are well below this amount. González said that Grupo México is expected to propose the purchase for US$10 billion, which is closer to the desired amount.

Experts are concerned about Grupo Mexico's results in 2022, however. Its accumulated sales reached US$13.8 billion. Although this was a good result, sales were 6.1% lower than in 2021. The company's mining branch achieved sales of US$10.968 billion in 2022, down 9.3% from 2021 and down 1.8% in 4Q22 compared to the previous quarter. The drop was mainly due to slow production and low prices of key metals, such as copper. However, these results were partially offset by sales of byproducts like molybdenum and zinc.

The company also faced other “uncommon” issues, like protests and illegal blockades. On Feb. 28, 2022, community members cut the company’s water supply for the Peru-based Cuajone complex, which also affected the company’s operations at Los Chancas. Both incidents had repercussions such as a temporary drop in mineral grades and production. Despite the problems, the company recovered copper production by 0.1% year-on-year during 4Q22.

Grupo México invested US$1.5 billion in projects in 2022, 10.3% more than in 2021. In 2023, the company expects to invest US$1.8 billion in different. The company highlighted that its transportation and infrastructure divisions drove solid results in 2022. Sales in the former division amounted to US$2.713 billion, 7.5% more than in 2021. The infrastructure division achieved sales of US$664 million, 19.1% more than in 2021.