Ferrovial celebrates on Thursday at 12:30 Determined Shareholders Meeting. The company will predictably approve the relocation of its headquarters to the Netherlands, a measure that has sparked a real backlash in politics, business and the media. But the party doesn’t end with the board vote tomorrow. The game has overtime. Here are the keys to one of the most famous business operations in Spain.
1.- What is Voted at the Meeting?
Shareholders are voting at 12:30 on Thursday to relocate the company headquarters from Spain to the Netherlands on the recommendation of the Board of Directors. The company cited economic reasons. He thinks Ferrovial from the Netherlands is more plausible to be listed directly on Wall Street (a “well-known” alternative, in the words of CEO Ignacio Madridejos), which is his big goal. Because? 80% of Ferrovial’s business is already outside Spain, and 92% of investments through 2027 are in the United States, where it expects the business to “intensify even further”. With this roadmap, the company listing in New York It directly reinforces your brand’s reputation, facilitates possible corporate transactions (acquisition or merger) in the region, and gives you access to a wider investor base. The thing is, Ferrovial is already listed on Wall Street through so-called ADRs, which is an inadequate option for the company as it feels that its value as a company does not reflect its full value.
In addition to this reason, the company points out that: Moving headquarters to the Netherlands also offers you other benefits: It is a country with a triple ‘A’ credit rating, much higher than Spain’s, a conducive environment for businesses and investors, and a reliable legal system. These advantages should translate into lower financing costs in debt issuance.
2.- Tension with the government
Not surprisingly, Ferrovial announced on February 28 that it would offer shareholders to relocate its headquarters to the Netherlands. The government didn’t like it.. After a legislature where the executive directly clashed with business people, Ferrovial’s statement was interpreted as a result of what this climate could bring. The company also acknowledged that it needed to address the issue in another way. He did not adequately explain the decision to the Government (just a few hours) and said that one of the reasons for the march was that the Netherlands had greater legal security, which is equivalent to saying that Spain does not have that security. to the same extent.
The government came out in a whirlwind against the relocation. He did this by implying that the decision was justified so that the Del Pino family, who owns one-third of the capital, would receive tax benefits; looking for legal loopholes in the anti-opas shield, something experts consider impossible … Gonzalo García, Minister of State for the Economy, in an unconventional move (discussed by some as intervention) the CEO of the company in writing I didn’t see “economic motivations” in the change of headquarters, which was equivalent to implicitly warning the Tax Administration, because the Tax Administration could have prevented Ferrovial from benefiting from the tax neutrality regime if the reasons were shown to be non-economic. In other words, Ferrovial could have gone after paying a large number of millions to the Treasury.
3.- Is the match going to overtime?
The key here is timing. On the one hand, it seems clear that the majority of the Board will support the relocation decision. The president will vote in favor Rafael del Pino (20.4% of capital); some funds like its sister María (8.2%) and giant TCI with 7%. Also, California pension plans Calpers and Calstrs, Canadian fund CPPIB and Calvert Investments (manager of Morgan Stanley) funds will follow in the footsteps of TCI, which has already shown at least 36-40% support. To these favorable votes, we must add Norway’s Norges Bank’s astonishing last-minute return of 1.5%; That’s hours before several Boards decided in favor after announcing a few days ago that the operation would be voted against for “not maximizing value” for shareholders.
And against? Until now and after Norges’ return, only the opposite position of Leopoldo, a member of the del Pino family, is known, slightly over 4%. The key point is that Ferrovial made the operation in its “Cross-Border Joint Merger Project” conditional on not exceeding 500 million, the equivalent of 2.57%, of the payment to shareholders who voted against it and demanded repayment of their titles. of capital. Leopoldo del Pino does not appear to be willing to demand repayment of title deeds for the time being, and the reality is that Norway’s withdrawal removes any drag effect that may exist, making it somewhat difficult for other shareholders to follow through.
The thing is, the shareholders who voted against get this lot on de facto extension as they have one month from the announcement of the transaction in the Official Gazette of the Trade Registry (Borme). Ferrovial Shareholders Meeting.
4.- What will happen the day after the meeting.
In the event that the General Assembly approves the transaction, except for a major surprise, a one-month period is opened for those who voted against them, during which they may or may not request the repayment of their titles. that’s what could happen jeopardize the operation. If the requested repayment amount exceeds 500 million Euros (at the rate of 26 Euros per title), as determined by the agreement of the Board of Directors, the operation will be cancelled. If this is not successful, the merger operation will begin, in which Ferrovial will acquire the parent company of its current subsidiary (FISE) in the Netherlands. FISE will take over all of Ferrovial’s assets, liabilities and other legal relationships and will allocate FISE shares to Ferrovial’s shareholders in exchange for their one-to-one shares in Ferrovial. It will then end with the liquidation of Ferrovial without being liquidated.
FISE will request that its shares be accepted for trading on Euronext Amsterdam and the Spanish stock exchanges on the effective date of the merger (which takes place at 00:00 on the day following the date of the merger). the deed of merger is issued in the Netherlands) or shortly thereafter, after that also entry to one of the United States stock exchanges. Ferrovial’s shares will no longer be traded in the Spanish markets.
For tax purposes, the merger will also be effective on the Effective Date of the Merger.
FISE’s board of directors will consist of the same members who form part of the Ferrovial board.
5.- What role does the treasury play?
Ferrovial argues that there are economic reasons that justify the change of headquarters and shows its intention in this direction. Benefit from special tax regime for mergersIt allows the deferral of taxation of profits that may arise in the course of business activity. If the transfer of the headquarters continues – in the form of merger by absorption – the Tax Office will then be able to verify whether there really are “valid economic reasons” justifying this transfer of the headquarters. Soledad Fernández, director of the AEAT, has already warned: The inspection will review the process at that time and these verifications are long-term, with a duration of one or two years. If it is determined that there are “no valid economic reasons”, AEAT may decide that the special merger regime cannot be applied and Ferrovial may then be required to refund any applicable tax benefits. “Logically, this type of regulation is always accompanied by high amounts,” the AEAT director generally warned.