Last minute bid drops Aeromexico in Citigroup consortium's bag

Dramatic last minute bids by competing parties have finally resulted in the Mexican government selling its majority stake in airline company, Consorcio Aeromexico, to a group of investors that includes Citigroup's Mexican unit Banamex. As the seconds ticked away for the expiry of the offer deadline, the group's offer of MXN2.7159 a share, or $249 million, for the carrier, turned out to be the highest.

The Banamex group reiterated its plan to inject $240 million into the airline within 90 days, and also announced the appointment of Jose Luis Barraza as the new chairman of the company.

A counter-offer of MXN2.72 a share from businessmen Alberto Saba Raffoul and Moises Saba Masri arrived just two minutes after the offer expired.

In a moment of high drama, the approach of the expiry time for the Banamex group's offer saw a flurry of bids. First, the Saba's raised their bid to MXN2.50 a share from MXN2.33. A minute before the deadline, the other group presented its MXN2.7159 a share offer, up from MXN2.2508 a share. This, ultimately, was followed by the higher Sabas bid, which however, failed to meet the time deadline.

Moises Saba conceded defeat, saying the final bid arrived too late, while criticising the way the government went about making its decision.

Saba, who earlier had described the bidding war as Russian roulette, said he doesn't plan to appeal because they do not want to obstruct the process any longer.

Meanwhile, Gerardo Rodriguez, public credit director in Mexico's finance ministry, said the government was pleased with the price it received for its 62 per cent stake in the carrier.

Aeromexico reported an operating loss of $108 million in the first half of 2007, which it attributed largely to increased competition from low-cost carriers pushing down prices, and higher fuel costs.