Everything is ready in Madrid for Ferrovial shareholders to meet at one of the most important events in its long business career. At 12:30 p.m. this Thursday, the ordinary general meeting of shareholders will begin, in which the main issue will be the corporate reorganization process that will entail the departure of the company’s headquarters from Spain, heading to the Countries Low and with an eye on listing in the United States.
The focus will be on items 10.1 and 10.2 on the agenda, where the shareholders must rule on the reverse and cross-border merger plan that will destroy the current subsidiary Ferrovial Internacional SE (FISE) in the new parent company of the group, at the cost of of Ferrovial SA, will be absorbed. The company seeks to strengthen its international profile and for this it wants to trade its shares simultaneously in the Netherlands and Spain, with the aim of jumping to the other side of the Atlantic sooner rather than later.
Despite the public noise caused by the discrepancies between the Government and the company, Ferrovial’s board of directors seems to have tied the support of the majority of the shareholders and only a massive flight of its minority partners could put an end to its moving planes. The favorable votes of the current president Rafael del Pino (20.45%), his sister María (8.21%) and the support already verified from the TCI (6.42%), Lazard (3.08%) and Blackrock funds (3.18%), in addition to the last to join, Norges Bank (1.5%) seem necessary to confirm the exit from Spain.
But even with the majority support of capital, there may be surprises, if the number of retail investors or some relatives not happy with the decision vote against the transfer. A very high percentage of rejection is not necessary to create doubts about whether the operation can be carried out. Ferrovial would have set as a condition for the merger and removal operation that, at most, 2.56% of the capital exercise the right of separation, although it is a limit that could be reconsidered if the board of the two merged companies (the Dutch and the Spanish) so decided. If the opposite vote is very high at the meeting -as a precondition to request a ‘divorce’ it is mandatory to vote against the merger and transfer at the annual meeting of shareholders-, a period of uncertainty opens for the company.
Ferrovial had established this limit, which is low in capital but which presupposes ‘compensating’ shareholders with 500 million euros to ensure that the exercise of this right will not negatively affect the group from a financial point of view. Therefore, if the volume of votes against considerably exceeds that 2.56%, the market could begin to assess whether the group’s indebtedness can withstand this step.
So far, the markets will be quiet, so it seems they have assumed the trade will go ahead. In fact, this Wednesday Ferrovial’s shares closed at 27.14 euros, at their highest level this year, almost touching their twelve-month highs and more than one euro above the 26.0075 that will be paid to shareholders who opted for the divorce.
Reelection of directors and remuneration
In parallel to the merger, the company is presenting several proposals to the board, including the reformulation of its director remuneration policy, which will be voted on just after the reverse merger. This policy is complemented by a new long-term remuneration system for the company’s executives, which will be linked to achievements and which will consist of the delivery of company shares.
This vote will take place once the re-election of the Ferrovial CEO, Ignacio Madridejos, and the directors Philip Bowman, Hanne Sørensen, Juan Hoyos and Gonzalo Urquijo have been determined, whose remuneration along with those of the other members of the board will also be evaluated. Subsequently, a 5.109% reduction of the share capital through redemption will be submitted to a vote, up to a maximum of 37,168,290 shares.
Approve some record accounts
But the meeting will not only speak with a Dutch accent. The agenda includes the approval of the management of the board of directors and the annual accounts for the year 2022, which left a positive result of 186 million euros. Its sales grew substantially to 7,551 million, supported by the improvement in all business branches, highlighting its main one, construction (+6.3%) and the highway segment (+32%), supported by the improvement in traffic in the US. USA
The announcement of the departure of Spain camuflu, to a certain extent, the publication of its business results, which despite continuing to be positive, left a net result 85% lower than that of the previous year, when they rose to 1,195 million. Ebitda grew to 728 million, compared to 610 in 2021, and was aligned with the objectives of the 2020-2024 Strategic Plan, which established a gross operating margin of around 700 million per year, which was not met in either of the two previous years.
The rest of the points include the re-election of the company’s auditor, a task currently entrusted to EY; or the vote on the 2022 climate strategy report, driven by the influence of the billionaire owner of TCI, Chris Hohn. The activist started a campaign against Ferrovial and other companies in 2019 where he demanded a new sustainability policy based on the reduction of emissions and that he seems to like, after the past endorsed his participation with a new capital.
