(Bloomberg News circulated the following article by Thomas Black on August 23.)
MEXICO CITY — Grupo Mexico, the world’s seventh- biggest copper producer, wants to sell shares of its railroad unit to the public to “unlock” the unit’s value, the chief financial officer said.
“The company has the size and it has the growth,” CFO Eduardo Gonzalez said in an interview, referring to the rail unit. “Timing is hard to say right now. It’s certainly not going to be years.”
The sale of shares in the railroad unit is part of Grupo Mexico’s strategy to expand in the Mexican transport industry through investments in rail, ports, shipping and warehousing, Gonzalez said.
Mexico’s transportation industry has great potential to grow because of decades of inadequate investment and the opportunity to make Mexico a gateway for Asia to sell goods to the U.S., Gonzalez said.
“The transportation sector really has no limit,” Gonzalez said. “It could become substantially larger.”
The railroad unit now accounts for about 10 percent of the Grupo Mexico’s earnings before interest, taxes, depreciation and amortization, he said.
The rail unit share sale doesn’t depend on Grupo Mexico winning an appeal of an antitrust agency ruling in June that blocked the acquisition of Ferrosur SA, a Mexican railroad in southern Mexico, Gonzalez said.
Grupo Mexico said on Nov. 25 it agreed to buy Ferrosur in exchange for Grupo Carso SA, an industrial company controlled by billionaire Carlos Slim, taking a 25 percent stake in Grupo Mexico’s transportation company. Grupo Mexico is expected to file an appeal to the ruling this week and the agency has 60 days to respond, said Juan Rebolledo, a company spokesman in an interview.
Grupo Mexico’s shares in Mexico City rose 15 centavos, or 0.4 percent, to 34.67 pesos.