Argos Gains Most Since 2011 After Canceling Isagen Purchase Plan
Grupo Argos SA (GRUPOARG) rallied the most since March 2011 after the Colombian cement and energy conglomerate canceled its plan to purchase a majority stake in the state-controlled power producer Isagen SA. (ISAGEN)
The holding company’s shares gained 6.9 percent to 18,180 pesos at 12:46 p.m. in Bogota. Isagen tumbled 5.2 percent to 2,980 pesos, the most since October 2008. The benchmark Colcap index added 0.6 percent.
Colombia is selling its majority interest in Isagen to raise money for infrastructure such as new and improved highways. Argos had planned to sell stock or assets to pay for the Isagen stake and backpedaled as its share price sank, according to Jose Alberto Velez, the holding company’s chief executive officer.
“With market volatility right now, the sensible decision and the most responsible one to shareholders is to not take part in the auction,” Velez said by phone after the close of trading yesterday.
Grupo Argos had planned to pay for the purchase either by issuing new shares or selling stock holdings, according to Velez. The company’s stock declined 13 percent this year through yesterday, while its cement-maker subsidiary Cementos Argos SA (CEMARGOS) slumped 15 percent and energy unit Celsia SA declined 14 percent.
The possibility of equity sales “was a major reason for the underperformance of those stocks over the past months, and therefore current news should have a positive effect,” Banco Santander SA analyst Andres Soto wrote in an e-mailed report. The holding company could have put up for sale 8.2 percent of Cementos Argos and 1.5 percent of Grupo de Inversiones Suramericana SA (GRUPOSUR), according to the report.
The government has said other possible buyers for Isagen include Charlotte, North Carolina-based Duke Energy Corp. and France’s GDF Suez SA. Bogota-based Empresa de Energia de Bogota SA has said it also intends to bid.
To contact the reporter on this story: Christine Jenkins in Bogota at email@example.com