Bachoco owners ‘spread their wings’ and challenge shareholders; prepare public offering – El Financiero

The family that exercises control of the Mexican poultry industries Bachoco would be scheduled to launch a public offering for outstanding shares next week, despite last-minute calls from minority shareholders for the company to reconsider.

Edificio del Noroeste, a company controlled by the familia Robinson Bours and owner of 73 percent of Bachoco, will offer 81.66 pesos per share from Monday, August 22 to October 5, according to a statement presented to the Mexican Stock Exchange (BMV) last week.

When the offer was announced in March, a group of US and Mexican funds wrote a letter to the company’s board complaining that it fell far short of comparable recent transactions and represented an abuse of the family’s power. They now face a choice between selling or facing worsening liquidity as the free float shrinks. The group sent another letter this week reiterating its complaints.

This price is even less acceptable today than in March… considering Bachoco’s record profitability for the first and second quarters of 2022,” the group considered, according to a copy of the letter seen by Bloomberg News. They said they represent 15 percent of the shareholders, or more than half of the floating shares the family seeks to acquire.

An attorney for the Robinson Bours family stated that the most recent letter that had been released to the media had not yet been received by the board. Regarding valuation complaints, he said the offering marked a premium over where the shares were trading and noted that many companies were trading below book value or at depressed valuations.

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While the offering price represents a 20 percent premium to the share price in March, it is 24 percent lower than the company’s average price target of five analysts tracked by Bloomberg.. Bachoco shares have risen almost 14 percent since July and reached a two-and-a-half-year intraday high on Wednesday of 79.88 pesos.

“The low offer severely undervalues ​​Bachoco and only favors the Robinson Bours family”, shareholders said.


The group includes Mexican pension funds Afore Coppel and Afore Sura, government officials’ pension fund Pensionissste, brokerage Grupo Bursátil Mexicano, and U.S. firms Tweedy, Browne Co. and Sprott Asset Management USA Inc.

They urged the board in their new letter to consider an ongoing buyback program, rather than the tender offer, and insisted independent board members should evaluate the deal.

The purchase plan is the most recent of a series of IPOs that have undermined the attractiveness of the Mexican stock market. The country has not had a significant initial public offering since the end of 2017, while at least six companies have delisted this year or have started such a process.

The risk of such acquisitions permeates the Mexican market, where more than 90 percent of listed companies are mostly family-owned.

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