Gilinski And GEA: A Dispute Over Colombian Business Power

A few weeks ago, it became known that the Gilinski Group seeks to keep control of one of the most important food companies in Colombia: Nutresa. At the time of the news, the GEA, owner of the company, asked to review the legality of the offer and this has become, perhaps, the most important legal dispute in recent times of large business groups.

To understand this conflict, it is important to understand who the actors are: on the one hand we find the Grupo Empresarial Antioqueño (known as the GEA) and on the other side is the Grupo Gilinski.

What is the GEA?

The short answer, as already mentioned, is the Grupo Empresarial Antioqueño, also known as the Sindicato Antioqueño. But the long answer is a bit more difficult to understand. It is made up of 3 large conglomerates: Grupo Argos (cement company), Grupo Sura (insurance company) and Grupo Nutresa (food company). In addition to being one of the most powerful conglomerates in Colombia, they are recognized for having political favors in the department of Antioquia and, particularly, in the city of Medellín. It is said that this group is the one who decides which politician remains and which is not. They are an important group that recently also has a dispute with the current mayor of the second most important city in Colombia, Daniel Quintero (Medellín).
However, despite being 3 conglomerates united, it does not mean that there are 3 companies. For example, Sura owns 46% of the shares of Bancolombia, the most important bank in the country (and which was previously part of the Gilinski Group).

What is the Gilinski Group?

The Group belongs, for the most part, to the Gilinski family, headed by Jaime Gilinski Bacal, the fourth richest Colombian, according to Forbes magazine. It is the owner of Banco GNB Sudameris and Grupo Semana, a media conglomerate, in which the Semana magazine stands out , one of the most influential in the country .

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They are a politically active family. They have been close to uribism, since the founder of the group and father of Jaime Gilisnki, Isaac Gilinski Sragowicz, was ambassador to Israel during the government of Álvaro Uribe; then extraordinary and plenipotentiary ambassador of Colombia to the United Nations Mission in the first Government of Juan Manuel Santos; and he is currently Colombia's alternate ambassador to the UN. Additionally, it is considered that his purchase of Semana Magazine is to promote a right-wing-conservative partisan medium, a Colombian Fox News.

What is Nutresa?

Nutresa is one of the GEA member conglomerates, but it is also the leading processed food company in Colombia and one of the most important in all of Latin America. Among the most recognized are: Compañía Nacional de Chocolates, Compañía Galletas Noel, Industria de Alimentos Zenú, Colcafé, Pastas Doria, El Corral, etc.

According to the company, last year, in the midst of the COVID-19 pandemic, Grupo Nutresa registered sales of more than 11 billion Colombian pesos, which represents an increase of 11.7% compared to the previous year.

What is the conflict?

Some time ago, the Gilinksi proposed an OPA (Public Offering of Acquisition) offer to control Nutresa. The initiative sought to keep 50.1% (or up to 62.62%) of the important company. This offer, with a higher price than the stock market, seeks that shareholders are willing to sell their part. For this, they will have the opportunity to accept the offer until December 17, when the OPA will expire, for the moment, the Colombian Stock Exchange reported that no shareholder acceptances have arrived, but this could change as the date approaches. closing of the offer.

For its part, the GEA feels that this Public Offering of Acquisition was hostile, since it was not carried out with their approval and for this reason, they have been looking for a competing takeover bid that seeks resources from other economic groups. There are different ways to defend against a hostile takeover bid, but they are all risky and more so when the company willing to buy still wants to buy it regardless of the loss of money.

This week it was known that the Gilinski group also presented another takeover bid, but to buy between 25.34% and 31.68% of the shares of Grupo Sura for about 4.7 and 5.9 billion pesos, according to El Viewer. This would indicate a clear offensive to take control of one of the most important groups in the country and that would leave the Gilinski as one of the most powerful economic conglomerates in the entire Andean country.

But this is not the first dispute between the two sides. Already in the 90s, when the Gilinski were owners of Banco de Colombia, after buying from the State after the crisis of the GranColombiano Group. After saving him, they merged him with the Colombian Industrial Bank of the GEA, selling him 51% of the shares of the Colombian bank. Hence, Bancolombia was born. However, the Gilinskis denounced that the GEA only put in 8 million dollars and the rest was leveraged from the money of savers.

If the Gilinski were to enter any of these 3 companies (especially Sura), they would not only enter the Group of the company, they would immediately enter at 3, since each of these companies has a shareholding in the others. Which says that if it controls, for example, the Nutresa group, it will also have 13% of the Sura Group and 13% of the Argos group. This would put the Lithuanian Jewish clan as one of the most important players in the country.