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Isagen Surges on Grupo Argos Interest for Stake: Bogota Mover

Isagen SA, operator of Colombia’s largest hydroelectric plant, jumped the most in almost two years after cement and power-generating conglomerate Grupo Argos said it’s prepared to “pay well” for a stake the government is selling in the company.

Isagen gained 4.1 percent to 2,945 pesos at the close in Bogota, the biggest increase since August 2011. It was the highest price since the government sold a portion of its stake in an initial public offering in 2007. The stock was the best performer today on the benchmark Colombian Colcap index, which rose 0.5 percent. Grupo Argos added 2.3 percent.

The Colombian government announced July 29 that it would auction off its 57.66 percent Isagen stake for a minimum of 2,850 pesos a share, for a value of at least 4.5 trillion pesos ($2.4 billion). Grupo Argos Chief Executive Officer Luis Alberto Velez said in an interview with Blu Radio today that his company is prepared to pay “a bit more” than 4.5 trillion pesos.

“You have a potential buyer that is already saying I’m willing to pay more,” said Diego Usme, an analyst at Ultrabursatiles brokerage in Bogota.

Grupo Argos said in a regulatory filing yesterday that it would bid along with two subsidiaries, Celsia SA and Empresa de Energia del Pacifico SA. Celsia is an electricity generator while Empresa de Energia del Pacifico is a utility in western Colombia’s Valle del Cauca province.

Colombian Finance Minister Mauricio Cardenas told Caracol Radio on July 30 that other potential buyers include Charlotte, North Carolina-based Duke Energy Corp. and France’s GDF Suez SA. Duke and GDF Suez officials have declined to comment.

“We are talking about one of the largest transactions in the history of the country,” Bancolombia SA analysts wrote today in a report. “A possible bid by multiple candidates for control over the company may bring further upside.”

The analysts have a buy rating on the stock, with a target price of 3,070 pesos a share, or 4.2 percent above today’s closing level.

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