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Bank Investors Back Out in Surprise Last-Minute Move

March 7, 1992

MEXICO CITY (AP) _ Investors have withdrawn the $861 million offer they made last week to buy a controlling interest in the government’s Banco Somex, opening the way for the second-highest bidder to buy the bank for $615 million.

The selloff of state-owned banks is part of the government’s effort to raise cash and institute market-oriented reform.

An announcement late Thursday said some of the investors who made the higher offer ″had expressed doubts about the reasonableness of the bid presented, considering the current conditions of the market.″

The investment group is headed by Eduardo Creel Cobian, Vicente Ariztegui Andreve and Eduardo Alejandro Castillo.

Creel said on Thursday his group would not pay the 20 percent deposit required and informed the Treasury Department ″of the impossibility of fulfilling the terms of the offer,″ the Treasury statement said.

The Creel-Ariztegui-Castillo group had offered $861.8 million for only 51 percent of the capital shares, more than 4 1/2 times book value.

The federal Banking Disincorporation Committee instead awarded the bank to the second-highest bidder in the March 1 contest, Grupo Invermexico, represented by Carlos Gomez y Gomez, Manuel Somoza Alonzso and Antonio Franck Cabrera.

Invermexico has promised to pay $615 million in return for 80.62 percent of the bank’s capital shares. The bid is 4.15 times the bank’s book value.

Economists said the Creel group decision was reasonable, but argued that even at the lower price, Banco Somex is overpriced.

Another 17.5 percent of the bank is expected to be sold to the bank’s new directors. The remaining shares have been trading on the Mexican stock market.

The privatization process started with the first announcement of a bank auction in February 1990. So far, 11 of Mexico’s 18 commercial banks have been sold back to the private sector.

The banks that have been sold have fetched between twice and four times book value, double what had been expected originally.

The nation has earned about $11.6 billion, which is being used to pay off the national debt and fund public works projects.

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