The recently-announced decision by Colombia’s largest cement fir, Cementos Argos, to sell its non-cement assets to its investment arm, Inversiones Argos (Inverargos) is neutral and has potential upside, according to Chilean financial services firm Celfin Capital.
Argos’ assets include stakes in publicly-traded companies such as financial holding Grupo Sura, food conglomerate Nutresa, and Colombia’s largest bank, Bancolombia (NYSE: CIB). Real estate, ports and coal assets will also be divested.
"We believe that the final impact on Cementos Argos shareholders is neutral, with potential upside that will depend on the future value that Inverargos can realise by investing in the development of the real estate and coal assets," Celfin’s Jairo Agudelo wrote.
Following the divestment, Cementos Argos will become a pure player in the cement business, which will make the valuation process easier for investors, with a cleaner structure and the possibility of direct comparison with its peers.
Cementos Argos has called for an extraordinary shareholders meeting to take place at the end of November to approve the split.
If approved, financial services regulator Superfinanciera is expected to give approval by early February next year. Argos is then expected to ask authorities to suspend trading of its stock for a 7-10 day period to avoid possible manipulation of the share price.
"In our view, this suspension period will help investors to realise the true value of Cementos Argos after the transaction, considering that they will move US$3.55bn in assets to [...] Inverargos, which would have an impact on the share price of Cementos Argos," the report reads.
Source: Business News America