Madrid, 20th October 2009. Ferrovial's Extraordinary General Shareholders' Meeting today approved the merger with Cintra to create a leading transport infrastructure and services group, in which its Construction division is a differentiating factor. "
The merger benefits the shareholders of both companies because they will participate in a larger company, which is more efficient, stronger, better diversified, and with much better access to capital markets. They will also benefit from a company with increased share liquidity and a more stable stock market valuation," explained Rafael del Pino, Chairman of Ferrovial. Since the Boards of Directors of both companies approved the merger, Ferrovial shares have increased in value by around 35% and those of Cintra approximately 70%, which now positions the latter above its flotation price in 2004.
The shareholders have approved the Common Merger Proposal presented by the Board of Directors. The transaction is being effected as a reverse merger, in which Cintra increases capital to absorb Ferrovial. The resulting company will be called Ferrovial S.A., and the toll road assets will be transferred to a new company, Cintra Infraestructuras. The merger is expected to be finalized by year-end, once all the required legal proceedings have been completed.
"The transaction evidences Ferrovial's ability to adapt to a changing environment and face new challenges," stated Rafael del Pino. The resulting company is present in over 40 countries, has 107,000 employees and revenues of 14.1 billion euro (2008 figure). The merged company will have a market capitalization in excess of 6 billion euro and 48.2 billion euro in assets.
Ferrovial is one of Spain's most international companies: in 2008, it obtained 64% of revenues and 82% of EBITDA from outside Spain. The company operates in construction, airport and toll road management, and services.
Following the merger, Ferrovial's free float in the stock market will rise from 41.7% to 55.4%, i.e. from about 1.883 billion euro to 3.196 billion euro.
The share exchange ratio in the merger is four shares of Cintra, with a par value of twenty euro cent each, per share of Ferrovial, with a par value of one euro each.
This ratio is supported by fairness opinions from BBVA, in the case of Ferrovial, and Merrill Lynch, in the case of Cintra. Both banks concluded that the ratio is fair. The independent appraiser appointed by the Mercantile Register also supported the method used for calculating the ratio.
Íñigo Meirás, CEO
Íñigo Meirás Amusco (Madrid, 1963) was appointed CEO of Ferrovial today. The shareholders appointed him as a Director of the company, and the Board meeting held immediately afterwards appointed him as CEO.
Meirás was appointed Managing Director of Ferrovial on 30 April 2009 with the aim of ensuring a seamless process of succession before assuming his new responsibilities. He replaces Joaquín Ayuso García, who will be appointed Director and Vice-Chairman of the company.
The shareholders also ratified the new 13-member Board of Directors. In addition to Iñigo Meirás, the other new member is independent director José Fernando Sánchez-Junco.
Benefits for shareholders, customers and employees
The integration of Cintra and Ferrovial evidences Ferrovial's ability to adapt to the situation of constraints in the financial markets.
The merger will combine the group's capabilities in all phases of infrastructure development and facilitate efficient assignment of financial resources among the various activities.
Following the transaction, Ferrovial will have a larger market capitalization and balance sheet with which to compete and create shareholder value. It will become the world's largest private investor in transport infrastructure, backed by benchmark assets. The merger pursues the following improvements:
- Operational: The merger will facilitate coordination between construction and infrastructure development and management. It is essential, above all, because the new Ferrovial will put greater emphasis on the development of Greenfield infrastructure projects.
- Financial resource management: Given the current constraints in the financial markets, it is necessary to optimize cash flow within the group. The merger will provide both companies with access to this internal cash flow, with resulting mutual benefits.
- Capital markets: The merger will create a larger company with deeper free float, which will increase share liquidity and reduce potential volatility. Accessing capital markets to raise funds will be performed from a platform of increased size, and with an enhanced ability to negotiate with financial agents.
- Administration and corporate governance: Combining the two shareholder bases will avoid potential conflicts of interest. Additionally, having two listed companies within a single group is now no longer recommended in the English-speaking world.
- Tax improvements: The merger will enable tax obligations to be managed more efficiently, to the benefit of shareholders. The new company will have a broader basis of consolidation, without inefficiencies, and will be freed from the burden of managing two separate tax consolidation groups.
- Cost savings: The merger will avoid cost duplication that results from the current diversity of shareholders.
