*

Grupo Mexico's bid comes after billionaire Chico Pardo's

deal to

buy 25%

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Citi still leaning toward sale to Chico Pardo, IPO

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Grupo Mexico open to Chico Pardo retaining his share

(Adds Citi reaction in paragraphs 3, 19-20)

By Kylie Madry

MEXICO CITY, Oct 3 (Reuters) - Mexican mining and

transportation giant Grupo Mexico on Friday

submitted an offer to purchase Citi's retail unit in the

country, known as Banamex, more than two years after it had

scrapped previous plans to do so.

Grupo Mexico, controlled by German Larrea, one of the

nation's wealthiest men, said in a filing that the bid showed

its "unwavering confidence" in the country and that such a

purchase would once again make Banamex competitive among its

peers.

Citi said in a statement to Reuters that it had not yet

received the offer, but that a previous deal to sell a 25% stake

in Banamex to local billionaire Fernando Chico Pardo and list

the rest was still its preferred outcome.

Under its offer, Grupo Mexico would purchase 25% of Banamex

at 0.85x book value, and the remaining 75% at 0.80x book value,

it said.

Citi paid $12.5 billion for Banamex in 2001.

The offer from Grupo Mexico comes a week after Chico Pardo,

who chairs airport operator ASUR, tied up a deal for

a 25% stake at 0.80x book value, or around $2.3 billion.

Analysts speculated at the time that by Citi accepting a

deal below book value, it would effectively create a "floor" for

a planned initial public offering (IPO) for the rest of the

firm.

GOVERNMENT TENSIONS PREVIOUSLY TRIPPED UP DEAL

Citi had previously sought outright buyers for Banamex, with

Grupo Mexico coming the closest to sealing the deal.

However, talks dissolved in 2023 after tensions with the

administration of then-President Andres Manuel Lopez Obrador led

the two sides to abandon an agreement.

Lopez Obrador had demanded the firm remain in Mexican hands

and that the new owner not be allowed to cut costs through

layoffs.

Chico Pardo said last week that current President Claudia

Sheinbaum had not put such conditions on his purchase.

Grupo Mexico said in the filing on Friday that safeguarding

Banamex's workforce would be among its priorities.

FUTURE OF BANAMEX

After the original Grupo Mexico deal fell through, Citi

opted to pursue an IPO for Banamex. That was still on the table

after Chico Pardo bought in, executives said last week.

Grupo Mexico's bid would do away with the need for that.

Grupo Mexico said that while it intended to purchase the

whole firm, if Chico Pardo wished to maintain his stake, Grupo

Mexico's bid would be reduced to 75% of the firm at 0.80x book

value.

More Mexican investors and pension funds could join in the

future, Grupo Mexico said.

Citi said the previous plan was still on track, though it

added the company was "committed to realizing the full value of

Banamex for (its) shareholders."

"If an offer is presented by Grupo Mexico, we will of

course review it in a responsible manner and consider, among

other risk factors, the ability to obtain required regulatory

approvals and the certainty of closing a proposed transaction,"

Citi said.