Part of Grupo Mexico SAB’s rail unit in Mexico’s Isthmus was seized by the military on Friday in an unexpected move that could complicate a bid by the company to purchase Citigroup Inc’s Mexican retail bank.
(Bloomberg) — Part of Grupo Mexico SAB’s rail unit in Mexico’s Isthmus was seized by the military on Friday in an unexpected move that could complicate a bid by the company to purchase Citigroup Inc’s Mexican retail bank.
A section of Ferrosur SA’s rail in Coatzacoalcos, Veracruz, was deemed “of public utility” and transferred to a government entity named Ferrocarril del Istmo de Tehuantepec that will be operated by the Navy, according to the daily gazette. Ferrosur is a unit of Grupo Mexico, which is controlled by billionaire German Larrea.
Shares of Grupo Mexico Transportes, which runs Ferrosur, fell as much as 3.8% in Mexico City trading, while shares of parent Grupo Mexico extended early losses to fall as much as 1.8% to 82.29 pesos.
The decree, which affects 120 kilometers of the 1,500 kilometer rail line, was signed by President Andres Manuel Lopez Obrador Friday, a day after issuing another order designating some of his flagship public works of national security and public interest.
Read More: AMLO Defies Top Court With Decree on His Flagship Works
Grupo Mexico did not immediately respond to a request for comment.
Larrea had met twice with Lopez Obrador this week, first at a meal with other top businessmen on Tuesday and again in private on Wednesday, local media reported. According to a report by local business columnist Dario Celis, AMLO had asked Larrea to cede the stretch of railroad that the Navy said was the fastest way to build the Isthmus train but the mining magnate had declined, instead offering to build a parallel way. The president said no, Celis published.
Grupo Mexico has been in exclusive talks with Citigroup to purchase the retail and middle market portion of Mexican bank Banamex since last December, but talks have dragged on.
(Updates with share price move, adds background.)
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