Spain is examining whether it can force Ferrovial to seek cabinet approval for the infrastructure group’s decision to move its head office to the Netherlands, deepening a conflict between the Socialist government and one of the country’s biggest companies.
A senior Spanish official said the government was “looking at” whether it could use a takeover law to make Ferrovial seek official approval for its plan, which has been described as a betrayal by Prime Minister Pedro Sánchez.
Ferrovial, which partially owns London’s Heathrow airport and is valued at about €20bn, shocked Spain last week by saying it would shift its head office to the Netherlands in order to facilitate the listing of its shares on the New York stock market. The company wants to merge its Madrid-based parent company into a wholly owned subsidiary, Ferrovial International, which has been based in the Netherlands since 2018.
Under a takeover law the Spanish government is evaluating, foreign bidders — including those from the EU — are required to seek cabinet approval for transactions in strategic sectors, including critical infrastructure.
“In principle it may be that the cabinet authorisation is necessary, but we are looking into that,” the official said, while adding: “It’s not that we are going to prevent or impede them.”
The provisions of the takeover law affect investments that would result in a foreign investor owning a stake of at least 10 per cent in a Spanish company. The company’s plans do not appear to meet that criteria because the owner of the Netherlands-based subsidiary that would be the acquirer is a Spanish company in the form of the Ferrovial parent group.
But the official said the circular nature of the transaction meant the law could still be relevant. “What is unusual is that the foreign company is still controlled by a Spanish company, which is the same company that it is going to acquire. So we are studying the case.” Teresa Ribera, one of Spain’s deputy prime ministers, raised the idea of cabinet approval on Monday.
Ferrovial disputes that government approval is required. “We understand that it doesn’t need any kind of authorisation,” said a spokesperson for the company. “This is a reverse merger, but internal . . . There is no reason why that legislation should apply.”
Separately, Spain’s securities regulator said it was not satisfied with Ferrovial’s argument that it needs to be in the Netherlands in order to list in the US. “They have not explained to us the technical difficulties related to listing in the US if you are based in Madrid,” said an official at the CNMV, the regulator. “If they explain them to us, we’ll analyse them.”
Ferrovial infuriated the government by raising questions over the Spanish business environment with its statement that the Netherlands offered a “stable legal framework”.
On Tuesday, Antonio Garamendi, head of the CEOE, Spain’s leading business lobby group, said a government attempt to block Ferrovial’s move was “the best way for there to be even more legal insecurity in Spain”.
The Spanish government has said one of Ferrovial’s motivations is to cut its tax bill by moving to the Netherlands, reviving an EU-wide debate over tax competition. The European Commission has said fighting tax avoidance is one of its priorities while Ferrovial insists the shift will have “no material tax impact” on the group.
Billionaire hedge fund manager Chris Hohn, whose fund TCI is one of Ferrovial’s biggest shareholders, backed the company’s decision, saying it was part of “a growing trend to unlock value for shareholders by listing in the US”. Jonathan Amouyal, a partner at TCI, said: “We are struggling to see how this argument [over a cabinet veto] could fly in the courts. The shareholders are the same pre- and post-deal.”
Additional reporting by Javier Espinoza in Brussels