Ferrovial works against the clock to ensure massive support from the board and prevent a shareholder flight | Economy

Never has a shareholders’ meeting of a private Spanish company aroused so much expectation in public opinion. The general meeting of shareholders that Ferrovial is holding tomorrow, Thursday, has transcended from a mere assembly of owners of a public limited company to a matter of State. What is usually a routine annual exercise in which the shareholders give their approval to the accounts of the past year and approve the management of the directors overwhelmingly unanimously, has become an outstanding scrutiny, which will be pending not only the entire financial and business sphere, but also the political spectrum.

The blame lies with the tenth item on the agenda, which refers to the planned merger by absorption of the Spanish parent company Ferrovial SA by the subsidiary in the Netherlands, Ferrovial International SE (FISE). Behind this corporate operation, the change of corporate and tax headquarters of the Spanish multinational from Madrid to Amsterdam is hidden. A change that has raised the resounding position of the Government, understanding that it sends a negative and essential message to international investors about the legal security of the country, and responds to unexplained motivations. The company, for its part, argues that the transfer does not pursue any tax advantage, but rather that it is an essential requirement to be able to be listed directly on the New York Stock Exchange, with the ultimate goal of being more visible to those investors and to revalue the price. And he has not hesitated to demand that the Executive respect the decision adopted by the shareholders.

The operation is complete, but is subject to a series of clauses. The main one is that Ferrovial makes the merger conditional on not having to grant more than 500 million euros to holders of shares that not only vote against the proposal but also exercise the right of withdrawal, it says, that they sell their shares and leave of the capital.

And it is that, despite the expectation that the meeting has aroused, the real test will begin just after it ends, since it is enough for an absolute majority of shareholders to vote in favor tomorrow for the proposal to go ahead. A majority that will be assured according to the previous statements of the large shareholders, and that will far exceed 80% of the quorum, according to the sources consulted.

The decisive thing will come when the meeting ends and the one-month period that the shareholders opposed to the transfer to the Netherlands have to decide whether to sell their shares in exchange for compensation of 26 euros, the listed price of the company estimated on the average, begins. of the last three months since the operation was announced on February 27. It says, to stop the planes of the Ferrovial council, it will not be enough to vote against, but rather, the shares will have to be sold.

With everything, the construction company reserves the possibility of modifying this limit of 500 million euros in the event that it were necessary, because neither in the item on the agenda nor in the annexes does it appear that this limit is immovable. “What the shareholders’ meeting says will be done”, a speaker has limited himself to pointing out when asked about this point.

supporters and detractors

The balance of forces between the withdrawal and the opponents of the operation is very unequal given that the operation has the support of the council. The president of the company, Rafael del Pino, who owns 20.45% of the capital, and his sister María de él, owner of another 8.2%, support the transfer of headquarters. This support is also guaranteed by the British activist fund TCI (The Children’s Investment Fund), the third largest shareholder of the infrastructure group, with 7% of the capital.

To convince the undecided, the council has ensured that ISS, Glass Lewis or Corporation, the three main power advisors (Societies specialized in advising shareholders to vote), have recommended a vote in favor of the proposal. Although some, such as Glass Lewis, have pointed out that the decision may entail “a possible reputational impact” due to the opposition of the Government, although he emphasizes that leaving management and the board of directors “in a better position to make decisions associated with the business since its internal organization.

For its part, the Spanish Association of Minority Shareholders of Listed Companies (Aemec) has also shown its support for Ferrovial in its “right to decide” on the future of the company, and has mobilized to convince similar international organizations to back transfer. For the moment, he has managed to get Better Finance and the World Federation of Investors to come out in defense of the interests of the company’s international minority shareholders. For both institutions, this cross-border merger proposal entails “advantages, not only because of the greater international dimension and notoriety that said merger would give to the brand”, but also because with the transfer to the Netherlands “it would have access to greater liquidity, with an improvement in financing conditions, and an optimal platform to operate in the United States”.

On the side of detractors of relocation, the most relevant is Leopoldo del Pino, brother of the company’s president, who owns 4.15% of the capital through his company Siemprelara, who has already announced that he will vote against the tenth item on the agenda. However, it does not appear that he a priori intends to avail himself of the right of separation.

Among the reasons for not carrying out this sale is that it currently enjoys a tax holiday until 2024, which it would lose when Ferrovial ceases to be a Spanish company and its parent company becomes a company based in the Netherlands, according to sources cited by Efe. This moratorium is contemplated for large investors based on their shareholding percentage or the value of their investment. If he changed his mind and sold his stake, he would have serious trouble for Ferrovial since the 30 million shares it owns are worth more than 800 million, exceeding the excess limit of 500 million that the company is willing to assume.

Norges Bank, the Norwegian sovereign fund that owns 1.49% of the capital, has also stated that it will vote against. “Mergers, acquisitions, and other corporate transactions have succeeded in maximizing shareholder returns. When evaluating corporate transactions, we also consider whether there is enough transparency to make a fully informed decision, whether all shareholders get equal treatment and whether there are any necessary conflicts of interest”, has justified the fund ultimately controlled by the Norwegian government led by The Labor Party.

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