Three key questions ahead of Ferrovial’s General Meeting

He railway box enters its point of no return this week. On the 13th, the company holds the General Meeting which must approve, by all indications, the transfer of the registered office to the Netherlands. There are three key questions that can guide you in understanding the process.

1.- What is voted on at the General Meeting on the 13th and how does this affect shareholders?

April 13th general meeting must endorse or vote against the transfer from Ferrovial headquarters to the Netherlands. It is the main point of the agenda and the main point of contention in the entire case of the company, which exploded when on February 28th the company announced by surprise that it would ask its shareholders to change its headquarters. The decision, an example of what should not be done from the point of view of communication, caught the markets with an altered pace, but above all the Government, which did not anticipate the measure. In addition, the idea slipped that one of the reasons for the transfer was the legal security environment in the Netherlands, which put the Government under the spotlight, much questioned by national and international investors precisely for this aspect.

The Government rushed out to criticize the measure fearing that Ferrovial’s move would be followed by other companies and from the beginning the Executive, at the highest level (ministers and secretaries of State) researched the companies to find out if it was an isolated case or the beginning of a more widespread movement. The certainty that this was not an action that more companies were considering reassured Pedro Sánchez’s office, which, however, deployed all the artillery available to try to defeat the operation: from the threat of using the anti-takeover shield (something of dubious use in this situation), to suggest obscure tax reasons for the Del Pino family.

2.- Is it really a good decision, why is it strategic?

In addition to the alleged tax consequences, the decision responds to business logic. The company believes that moving its headquarters to the Netherlands will bring an important advantage, such as lower volatility in its financing costs, thanks to the country’s more stable risk premium, which will result in lower financing costs for debt issues.

Furthermore, the transfer facilitates their primary objective: to list on Wall Street as an American company for all intents and purposes, something that, they emphasize, they can now only do in part through ADRs, something that both the Securities and Exchange A Commission explicitly denied (CNMV) as manager of the stock market, BME.

The company points out that 80% of its business already comes from the United States and that 90% of its future projects and its main opportunities are in the North American country. For Ferrovial, on the other hand, the greater presence in the United States reinforces its notoriety in the area, mainly with the regulatory bodies, “whose role is the adjudication of new key projects”.

3.- Could there be some kind of unexpected turnaround?

As far as is known, the government the grade dropped a little pressure to which the company was subjected, which on the other hand did everything in its power to clarify the reasons for its departure and guarantee that Spain is a country with legal security comparable to any other European State. It seems difficult for the Government to resort to legal figures such as the so-called anti-opa shield to torpedo the operation, as it is simply not an offer to buy another company. In recent weeks, the number of voices has grown calling for the exploration and creation of mechanisms for a company to maintain two registered offices, which would considerably ease the matter.

It is true that it is in the hands of the shareholders whether or not to overthrow the operation. for that 2.57% of the capital would be enough to sell and demand the redemption of its shares, something the company budgeted 500 million for. Overcoming this barrier, in theory, would cause the transfer to fail. In fact, shareholders who vote against have one month from the announcement in the Official Gazette of Mercantil Registration (Borme) of approval of the merger by the shareholders’ meeting.