Ferrovial approves moving its headquarters to the Netherlands

Ferrovial’s general shareholders’ meeting approved on 13 April 2023 the cross-border merger under which Ferrovial, S.A. will be absorbed by its Dutch subsidiary Ferrovial International SE (FISE), which will become the group’s parent company. The proposal, announced on 28 February, won 93.3% of the votes of the shareholders present, who represented more than 77% of the share capital. The group’s headquarters will therefore move to the Netherlands, although the operation still depends on several procedures.

The company’s reasons

Ferrovial presents the move as the step before listing its ordinary shares in the United States, where its business has grown, and says it will improve its competitiveness in international markets, the liquidity of its shares, its market capitalisation, its visibility among international investors and its financing conditions. It also argues that there are regulatory obstacles in Spain for that type of listing. Chairman Rafael del Pino told the meeting that Spain has always been his country and that the company does not renounce that.

Ferrovial insists this is not a tax operation: according to the company, the tax effect is neutral, it will carry on paying taxes in Spain and what it pays will be very similar to what it pays now. Del Pino described the process of achieving a dual listing as uncertain, and the operation is conditional on FISE’s shares being admitted to trading in Amsterdam and on the Spanish exchanges.

The government’s position

The government criticised the operation from the moment it became known. First Vice-President and Economy Minister Nadia Calviño said in an interview on 5 March that the decision was wrong and showed a lack of commitment to Spain, and that the government’s technical analyses cast doubt on the company’s public arguments.

A few days before the meeting, the Secretary of State for the Economy, Gonzalo García Andrés, sent a letter to chief executive Ignacio Madridejos arguing that there were no economic reasons for the move, that there was another route to a US listing from Spain with the support of the CNMV and BME, and that the economic rationale of the operation determines the tax regime that applies.

Finance Minister María Jesús Montero defended being in step with the Economy Ministry and argued that Spanish law does not prevent a simultaneous listing in Spain and the US. After the meeting, the government said it respected the shareholders’ decision and that it continues working to attract investment. Minority shareholder associations had accused the government of interference.

What changes for shareholders

Shareholders who voted against have a right of withdrawal: they can leave the company in exchange for €26.0075 per share in cash, below the €27.39 the share was worth on the stock market at the time. The period is one month from publication of the merger plan in the Official Commercial Registry Gazette (BORME); the company put it at mid-May. The merger will go ahead only if the total cost of these exits does not exceed €500 million, around 2.5% of the share capital.

If the operation goes ahead, Ferrovial, S.A. will disappear and the parent company will be governed by Dutch company law. The company expects the merger to take effect in the second half of 2023 and to apply afterwards for a US listing. Some assets and legal relationships will pass to FISE’s Spanish branch.

Anyone holding Ferrovial shares, directly or through a fund, should check whether they have a right of withdrawal, within what period and through which institution they can exercise it, and what tax consequences the operation may have for them, because these depend on each shareholder’s circumstances. Consult your tax adviser.

A head office can be moved at a general meeting; the tax and corporate-governance consequences take longer to show.