Ferrovial has gone to all lengths over the last few days to gain support among its significant shareholders and thus push ahead at today’s shareholders’ meeting with its plan to move its headquarters to the Netherlands. The efforts paid off yesterday, in part, with the decision of the Norwegian sovereign wealth fund to change the meaning of its vote and support the operation. He was the only one of the ten main shareholders outside the founding family who had so far opposed the plan.
Norges Bank Investment Management (NBIM), which manages the Norwegian pension fund’s investments, reported yesterday that it will vote in favor of the tenth item on the agenda of Ferrovial’s shareholders’ meeting, which refers to the reverse merger operation for the transfer of headquarters. A day earlier he had announced his rejection, alluding to the difficulty in making a “fully informed” decision, a circumstance that no longer occurs after last-minute contacts with the company.
For Ferrovial, this change of criteria further clarifies the path to the Netherlands. Norges Bank only has 1.49% of the company, but this percentage has a greater weight than it seems because the shareholding is very diluted and because of the influence capacity of the Norwegian fund. It manages close to 1.4 billion euros and is a reference in good investment practices.
At the moment, the only explicit rejection of the operation is that of Leopoldo del Pino, who has 4.24% of the company. On the other hand, his brothers Rafael and MarÃa – the first of them president of the company – support it, and accumulate 28.6% of the shares. Activist Chris Hohn, with 0.9% of the capital, also supports the plan, along with the three largest global vote recommendation agencies, capable of pulling in significant shareholders, such as Lazard, BlackRock and Vanguard, with stakes each of between 3% and 4%.
Today’s Thursday meeting, which will be held at 12:30 p.m. in Paseo de La Havana in Madrid, will not require a quorum, as it is being held on second call, which also facilitates the company’s plans. 52% of the capital is distributed among thousands of small shareholders with shares of less than 0.9%, and, if you add up all the Spanish investment outside of the family, it does not reach 10% of the total.
The only blocking option would consist of the right of separation enjoyed by shareholders who disagree with the proposed change. Ferrovial will pay them 26 euros per share in case they want to disassociate themselves from the project and sell their shares. If the requests add up to more than 500 million euros, which is equivalent to about 2.56% of the capital, the company will give up the operation. Leopoldo del Pino will vote against it at the board, but has reported that he will not sell the shares in this process.
An incentive to exercise the right of separation would be if the share price were below 26 euros, but this is not the case. Yesterday they closed at 27.14 euros, and did so with a rise of 1.23%, an indication that the market understands that the decision is already neck and neck in favor of the company. Ferrovial has risen 3.35% on the stock market since its change of headquarters announcement.
With the move, small investors will lose their ability to influence shareholders’ meetings, as the vote recommendation agencies themselves have already acknowledged. The Dutch regulations establish limitations on participation that do not exist in Spain.
The Minister of the Presidency, Félix Bolaños, said yesterday that the shareholders “have every right to know the truth” and to make an “informed” decision, and the Minister of Finance, MarÃa Jesús Montero, warned the company who may suffer a tax hit if he does not explain his decision in a convenient way. “The legislation is clear. When there are no economic reasons, there are certain tax elements that cannot be applied to the company”, he said in reference to the exemptions in this type of operation.
The General Council of Economists (CGE) calculates that Ferrovial could face a tax penalty equivalent to 25% of the latent capital gains of its assets if the Tax Agency concludes that there are no valid economic reasons for the transfer. The president of the CEOE, Antonio Garamendi, stated yesterday that “pressuring” Ferrovial to stay in Spain “is not the most appropriate way” to achieve the objective.
The company insists that it is not leaving because of the lower taxation in the Netherlands, as the Government says, nor because of the country’s legal insecurity, as the opposition indicates. Its objective, he reiterates, is to list in the United States and thus gain international exposure, since 82% of its income is obtained outside of Spain and 93% of the company’s institutional investors are international. Last year it generated 32% of its business in the United States.
