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Colombian tycoon and Abu Dhabi’s Sheikh Tahnoon seeks Nutresa’s global reach

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After a protracted battle to win control of Grupo Nutresa, Colombian billionaire Jaime Gilinski is banking on his deal partner Abu Dhabi’s Sheikh Tanu bin Zayed Al Nahyanwill help transform the Latin American food company into a global player.

The 65-year-old Colombian financier, his son Gabriel and International Holdings (IHC) Abu Dhabi Investment Vehicles controlled by sheikh tanuThe brothers of the UAE ruler this month outlined a deal under which they would become major owners of the Medellin-based group.

The build-up has been hailed by analysts as an “instant bargain”: The new owner spent a total of $2.7 billion over 18 months to accumulate stake through eight separate tenders, while Nutresa’s products range from chocolate to ice cream. Cut Meat, currently valued at about $6.4 billion on the Bogota Stock Exchange.

Gielinsky and IHC have already been approached by potential corporate buyers in anticipation of a possible spin-off of the group, given the paper benefits, a person familiar with the matter said.

“Since the first deal was announced, major food companies and M&A bankers have been calling for Nutresa. But that is not the purpose. For now, our purpose is to keep it,” the person said.

Instead, Jilinski will seek to use Sheikh TanuAnother person directly involved in the deal said the company’s network of companies would take the food group into India, Egypt or Indonesia, challenging Nestle and Mondelez in low- and middle-income markets.

“Through acquisitions and organic growth, Nutresa’s sales have the potential to grow from $4.5 billion to $10 billion in two to three years,” said the person, who declined to be identified as the details of the partnership are confidential.

One of Nutresa’s strengths is its access to raw materials, the person said. Colombia is one of the world’s largest producers of coffee and cocoa, as well as an exporter of cattle and meat. Nutresa also has access to a 45% stake in Abu Dhabi sovereign fund ADQ agricultural trader louis dafoss Negotiate good terms on other commodities. ADQ is a state investment fund also chaired by Sheikh Tahnoon.

Nutresa is the latest addition to the banking-to-real estate empire that Forbes estimates Jielinski’s fortune at $5.7 billion. Gilinski’s connection to Sheikh Tahnoon was seen last year when fast-growing diversified group IHC invested $200 million for a 49.9 percent stake in Lulo, the Colombian digital bank.

The UAE’s national security adviser oversees complex relations with neighboring countries and also oversees a vast array of state investments. As well as chairing ADQ and First Abu Dhabi Bank, the largest bank in the UAE, he was also named in March as chairman of the Abu Dhabi Investment Authority, the oil-rich emirate’s $850 billion sovereign wealth fund.

Javier Mejia, an economist at Stanford University, said the deal has geopolitical implications for the Gulf region.

“Nutresa is very important to IHC because it diversifies the Emiratis’ . . . food sources, which is very important in times of political disputes or climate shocks. Most of their food processing products are located in the MENA region [the Middle East and north Africa] and South Asia. Nutresa does a good job of geographically diversifying the portfolio. “

During Nutresa’s long financial siege, the Gielinskis have also gone after two other Colombian corporate crown jewels: financial conglomerate Grupo Sura and cement-to-infrastructure company Grupo Argos.

cocoa beans
Cocoa beans at the Nutresa chocolate factory in Medellin. The group produces and sells chocolate, coffee, cold cuts and other food products in Colombia and 16 other countries in the Americas © Nicolo Filippo Rosso/Bloomberg

The three companies are controlled by a powerful group of Medellin families known as Grupo Empresarial Antioqueño (GEA) through a network of cross-holdings designed to give them an unbreakable takeover. The bidders launched a series of tender offers for Nutresa and Sura and took significant stakes in both companies, but failed to achieve the levels needed to win control.

fighting gets bad, the two parties publicly defamed and initiated multiple lawsuits. The Gielinski family has accused GEA of running the company for the benefit of management and the controlling family at the expense of minority shareholders, while GEA has sought to paint bidders as corporate raiders bent on divesting assets.

A peace agreement involving a stock swap was reached at a Madrid hotel on May 24 and finalized on June 16, following negotiations by video link in Abu Dhabi.

Under the terms, the Gielinski family and IHC will receive at least 87.1% of Nutresa after relinquishing their stake in Sura. Sura and Argos will transfer their stake in Nutresa to bidders and launch a tender offer to minority shareholders to reach the 87.1% level.both sides agree to waive All pending litigation.

Fearful of losing control of the entire group, GEA executives preferred to negotiate an outcome that would allow them to keep two of the three main holding companies, according to people familiar with the matter. Regulators are exploring whether to declare the GEA a single economic bloc, which could force a full merger or dissolution, they said. GEA declined to comment.

Jilinski and his son Gabriel declined to comment. IHC did not respond to a request for comment.

Additional reporting by Simeon Kerr in Dubai

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