On July 31st Alfa, a large Mexican company, announced plans to spin off its remaining 75 per cent stake in Nemak, the auto parts company. Alpha’s shares soared 17 percent on the day of the news.
If shareholders approve the proposal at a meeting on August 17, they will receive one Controladora Nimak share from each alpha share and retain ownership of alpha shares.
“We plan to make a gradual and orderly transition to make Nimak an independent business,” Alvaro Fernandez Garza, Alpha’s president, said in a statement. The group said Controladora Nimak would list on the Mexican stock exchange after completing the share split, while Nimac, which was listed in 2015, would remain listed independently. Nimak shareholders will later decide whether to merge with Controladora Nimak.
According to Refinitiv, 75 per cent of Nimak’s shares are now worth 12.15 billion pesos (about $547 million). Nimak is an auto aluminium parts maker that supplies components to automakers including Ford, GM, Fiat Chrysler (FCA) and Toyota. The company suffered a sharp decline in second-quarter results and a $125 million loss on operating income, down 60 percent from 2019, making it Alpha’s worst-performing publicly traded company.
Analysts believe investors may cheer alpha’s break-up with Nimak, but Nimak could suffer a more severe economic blow during the outbreak. “Nimak has had a negative impact on Alpha’s performance and this transaction is extremely beneficial for Alpha,” Intercam said in a note. “
Alpha also owns 82 per cent in petrochemical company Alpek, 53 per cent in telecoms supplier Axtel and all in food company Sigma and oil and gas company Newpek. This year, Alpha plans to sell most of Newpek’s U.S. assets.