MEXICO CITY — An investment group led by GBM Atlantico has ousted the head of Videovisa and taken control in a hostile takeover, a company source confirmed.
At a Wednesday shareholder meeting, GBM Atlantico made the surprise motion to remove Eduardo Legorreta from his prexy post. Legorreta was in New York on business.
Another financial group, Grupo Banacci, backed GBM and, with other investors, pushed the measure through. They nominated GBM Atlantico topper Enrique Rojas’ son Alejandro Rojas, an unknown in the video business, as president.
Legorreta was still in New York on Friday and could not be reached for comment. A company spokesman was not available.
A complete surprise
The takeover was a complete surprise, the source said. “There were differences, tensions and pressures as to how the company was being run, but no indication of anything this big,” he said. “I can assure that Legorreta would not have been in New York if he had any idea this was happening.”
GBM Atlantico has been buying stock in Videovisa over the past few years, “but everyone assumed they were acquiring shares as a portfolio investment,” the source told Daily Variety. But with its backers, they control 51% of Mexico’s biggest video distributor and retailer.
The management change must be approved at a board meeting this week, and the source expects it will go through. Several of the “old guard” were nominated to a new board by the GBM Atlantico, and Legorreta, as a shareholder, may be staying on as a board member, he said.
Legorreta purchased the company in 1993 from Televisa, but he was heading an investment group. With all the subsequent recapitalizations, the source was unsure how much of Videovisa Legorreta still owns.
Videovisa has been hit hard by the economic crisis here. While it still controls 60% of Mexico’s rental market, on the distribution side, the company has lost business as former clients such as Columbia TriStar and Warner have set up their own subsids.
In 1996, sales edged up a mere 2% in peso terms from the previous year to 985 million pesos ($125 million) to eke out a profit of 14 million pesos ($2 million), vs. a loss of about $10 million 1995. But for the first quarter of 1997, it posted a loss of about $4 million.