UPDATE 2-Venezuela says not taking over Gruma’s local unit

* Chavez government had decreed takeover in May

* Gruma one of world’s top corn flour producers

* Shares down 3 percent in Mexico
(Adds quotes, background, byline)

By Eyanir Chinea

CARACAS, July 14 (BestGrowthStock) – Venezuela said on Wednesday
that it would not expropriate the local operations of Mexican
food-processor Gruma (GRUMAB.MX: )(GMK.N: ) and was considering
forming a joint venture instead.

The Latin American country decreed the takeover of Gruma’s
local unit, Monaca, in May as President Hugo Chavez’s socialist
government tightened its grip on food production amid shortages
and soaring inflation. [ID:nN13116794]

Vice President Elias Jaua said the Venezuelan government
was currently running Monaca’s operations, but that it no
longer planned to take ownership of its assets and was looking
into forming a joint venture with its owners.

“They have proposed the possibility of a joint venture and
we are studying it, but at the moment it is being administered
by the government,” he told a news conference.

Asked to clarify whether the authorities still planned to
take control of Monaca’s assets, Jaua said they did not.

Gruma, one of the world’s biggest corn flour producers, had
said after May’s decree that it would work with the authorities
in Caracas to find a fair price for its assets. (For key facts
on Gruma, click here: [ID:nN13210790])

Gruma shares fell 3 percent to 20.65 pesos in Mexico.

Chavez has nationalized large swathes of the economy of
South America’s biggest oil exporter, including various food
companies, as his administration battles one of the world’s
highest inflation rates.

Gruma has a second unit in Venezuela called Demaseca, but
it was not part of the action in May.

The Monterrey-based company had said Venezuela was
preparing to sanction it for refusing to sell flour during a
national shortage in April — a charge that Monaca denied.
(Writing by Daniel Wallis; Editing by Lisa Von Ahn and Gunna
Dickson)

UPDATE 2-Venezuela says not taking over Gruma’s local unit