off-the-wire

Proxy advisers recommend that Ferrovial shareholders vote for reverse merger

Kitco Media
By Reuters
Published:
Updated:
Reuters
MADRID, March 30 (Reuters) - Two proxy advisers have separately recommended that shareholders of Spanish builder Ferrovial approve a board-proposed merger that would relocate its headquarters to the Netherlands, although both acknowledged some collateral effects. Ferrovial announced in February it would seek a reverse merger to be absorbed by its wholly-owned Dutch subsidiary FISE, arguing the move would serve as a platform allowing the company to be traded simultaneously in Spain, the Netherlands, and later, the United States, joining stock indexes there.


Shareholders are set to vote on the merger on April 13. In a report seen by Reuters, proxy adviser Glass Lewis & Co. said it does not believe the proposed merger would have a "significant effect on shareholder rights" and recommended they vote for the board's proposal.


But "shareholders should be aware of the possible negative reputational impact of the transaction in Spain", the report said.


The Spanish government has heavily criticised the construction conglomerate's decision to move its corporate domicile.


Meanwhile, Institutional Shareholder Services (ISS) said a vote for the merger was warranted because it had "a compelling rationale, namely a U.S. listing with expected increase in liquidity and exposure to US capital markets". However, ISS added that the relocation was accompanied by changes in governance "that are not considered to be necessarily in the benefit of minority shareholders". Ferrovial has said 82% of its 2022 revenue originated outside of Spain and that it has a growing presence in North America.


Without commenting on the domicile transfer, Spanish stock market supervisor CNMV said it had studied the case alongside bourse BME. They did not find any obstacle preventing a Spanish company domiciled and listed in Spain from applying for a listing in the United States, CNMV said.


Economy Minister Nadia Calvino on Tuesday said both BME and CNMV had met with U.S. counterparts.


According to a person familiar with the matter, Ferrovial sees the board's proposal as a "real alternative" for shareholders, as it contends that Spanish securities are traded in the United States via ADRs and there is currently no other structure to allow them to be listed there, as is their goal. (Reporting by Corina Pons; additional reporting by Jesus Aguado and Emma Pinedo; editing by David Latona and Emelia Sithole-Matarise)

Messaging: corina.pons.thomsonreuters.com@reuters.net))
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