Pacific Rubiales Slides as Alfa JV Seen Delaying Takeover

Pacific Rubiales Energy Corp. fell the most in five years as a joint venture accord with Alfa SAB, its biggest shareholder, may delay the chances of a takeover, according to Credit Suisse Group AG.

The stock slid 13 percent to 17,420 pesos at 1:26 p.m. in Bogota, after earlier falling as much as 17 percent to the lowest since it started trading in Colombia in 2009. Latin America’s largest independent oil and natural gas producer announced a 50-50 joint venture with Alfa for future projects in Mexico late yesterday.

“The agreement to form a JV makes us believe that the possibility of a takeover has been, at least, delayed,” analysts Vanessa Quiroga and Maria Madrazo said in a research report today. “Our preferred scenario would be that this passive investment evolved into an operational partnership, as it would represent an opportunity for Alfa to get access to heavy oil expertise.”

Pacific and Alfa will study and bid on assets in Mexico as the country is opening up its energy industry to foreign companies this year, Pacific said in yesterday’s statement. Alfa, whose products include bacon strips and car-engine parts, first disclosed a 10 percent stake in the Colombian producer in May and boosted its stake to 19 percent in October.

Its stake in Pacific Rubiales is just below the 20 percent threshold that would require a company to start a takeover bid in most cases under Canadian securities law.

The joint venture will probably disappoint Pacific Rubiales shareholders “waiting for any near-term bid from Alfa for the whole company,” Nathan Piper, an analyst at RBC Capital Markets, said in a report. The deal “may preclude” a bid, Piper said.

Alfa gained 1 percent to 35.97 pesos in Mexico City.

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