(Bloomberg) — Controlling shareholders of Mexico’s Grupo Lala SAB aim to take the dairy company private again after efforts to expand in Brazil and the U.S. floundered and the stock wilted to more than half of its 2013 initial offering price. Shares jumped around 13%.
Lala said in a stock exchange filing late Friday that a group of equity owners were planning to pay as much as 20% more than recent prices for all outstanding shares. The estimated purchase price would be around 17.36 Mexican pesos, ($0.87) or 37% less than its IPO level, according to the filing. Shares traded as high as 16.88 pesos on Monday before settling down to 16.51 pesos.
The purchase process requires regulatory and shareholder approval, and could take into early next year.
The company raised around $940 million when it went public in 2013. Since then it’s had three chief executive officers, including Arquimedes Celis, the CEO who oversaw Lala’s 2013 listing and took over again last year. For much of last year, the company’s shares traded below 13.50 pesos.
Lala’s acquisitions in places like Brazil and the U.S. have had weaker margins because Lala “could not lean on the economies of scale it has in Mexico,” Citigroup analyst Sergio Matsumoto wrote in a note. In the end, the purchases Lala made were “expensive” and management “focused on countless innovations with little return,” Credit Suisse analyst Marcella Recchia said in a note.
Squeezed between an economy with restricted competition and a president often willing to clash with business leaders, Mexico has not seen an IPO that raised around $1 billion since late 2017. Lala is joining a string of companies that have gone private or are buying back shares such as auto parts maker Rassini, Grupo Santander Mexico and Sempra Energy’s Infraestructura Energetica Nova.