European Dynasty Splits Between Billionaire Brothers

During the past seven decades, Spain's Del Pino family, through its control of Ferrovial, a global building company well known for building airports, highways, stadiums, has forged one of the world's biggest industrial fortunes. 

‍

This week, a plan to relocate the group's headquarters to the Netherlands has not only angered the Spanish government, but also revived long-standing divisions among the family heirs who hold the company's fortunes, causing one of the biggest dynastic fortunes in Europe to crumble. The voting on Thursday on this proposal will have a significant impact on the future of a company that operates worldwide, including Heathrow Airport, as well as many other global operations.  

‍

It has been reported that Leonopoldo del Pino y Calvo-Sotelo, a son of Ferrovial's founder and brother of the current chairman Rafael, will vote against the plan, according to media reports that have not been confirmed or denied by him. After many years of tension in the family, it would be the latest twist in the story after a split within the family which is the biggest shareholder in the construction giant. It is possible for Leopoldo to derail the move if he does vote against it because the company has set a minimum approval threshold for it.

‍

Founder Rafael del Pino y Moreno was regarded as Spain's “king of bricks” in 2008 when he died at the age of 87. He left behind five siblings - Rafael, Leopoldo, Maria, Joaquin and Fernando - who have all parted ways with the company that made their fortune. In the years that have followed, they have squabbled over how to run the empire.

‍

There are now more than 8 billion dollars in the Del Pinos' combined net worth, largely as an outcome of their approximate 35% stake in Ferrovial, according to the Bloomberg Billionaires Index, as it stands at the end of 2017.

‍

In a statement issued by Ferrovial's spokesperson, the company said that, regardless of whatever decision Leopoldo makes, it would respect the decision of every shareholder.

‍

As a result of the Dutch plan, it is ostensibly hoped that it will facilitate more expansion, but some shareholders are wary because the Netherlands has been tarnished for being a tax haven sometimes in recent years. According to the company, this move would allow it to acquire cheaper credit and increase its appeal to equity investors prior to it eventually listing in the US. It would also include listing shares in Amsterdam, which would provide access to cheaper credit.

‍

Initially, Norway's sovereign wealth fund, which owns a 1.5% stake in the company, announced that it would vote against the proposed merger, citing that "mergers, acquisitions, and other corporate transactions should maximize shareholder returns" and raising concerns about transparency within the corporation. According to the fund, however, that they will vote for the proposal, although they have not given a specific reason as to why they reverted the decision.

‍

Rafael's proposal involved the company changing its domicile by merging with its Dutch subsidiary, which in turn would absorb its Spanish holding company, as part of a so-called reverse merger.

‍

The biggest stake Rafael holds in Ferrovial, a 20.4% stake, represents over three-quarters of his fortune worth $5.4 billion, according to Trade Algo calculations, which equates to more than half the value of the company.

‍

Through the Rijn Capital family office in the Netherlands, which acquired a stake in the Spanish low-cost airline Volotea in 2018, the 64-year-old has adopted quant strategies to manage his personal wealth. In addition to the three of his children, Rafael, Juan, and Ignacio, Maarten Weiss joined Maarten's firm in 2020 as chief investment officer, after he helped manage part of the Brenninkmeijer dynasty's fortune that led to the development of clothing retailer C&A. According to regulatory filings, Maarten Weiss joined the firm in 2020 as chief investment officer after helping manage parts of the Brenninkmeijer family fortune.

‍

He owns about 4.2% of Ferrovial, and through his investment company, Siemprelara, he has invested in a Spanish luxury hotel real estate company as well as a firm which has bought shares of listed companies in Spain, including Telefonica and Iberdrola, which are both listed in the Spanish stock exchange. The company's shares have since soared almost 40% since he halved the stake in early 2016, earning him about €580 million ($638 million). Since it was listed in 2004, they have risen about 280% since then.

‍

Stocks of Ferrovial are on the rise

There has been a lot of disagreement between Rafael's actions and those of the political leaders in Spain, including that of Prime Minister Pedro Sánchez, who has questioned the billionaire's commitment to the country as a result of his plan to move Ferrovial out of Spain.

‍

The Foreign Affairs Minister Yolanda D'az has accused Ferrovial of wanting to relocate its headquarters to the Netherlands in the name of fiscal reasons. Although there are businessmen who are committed to Spain, "this is not the case of Mr. Del Pino," President Sanchez said in March.

‍

The success of Ferrovial's relocation depends heavily on the proportion of shareholders who vote against it who then decide to sell their shares to the company in order for the relocation to proceed. There can be no way for the plan, which was announced on February 28, to go forward unless Ferrovial buys back 2.6% or spends more than €500 million on it in order to accomplish it. 

‍

As a result, the company has offered to pay holders of the shares a price of €26 per share — a price about one penny below what they are currently trading at — until May 13th if they wish to sell. Even though it is unclear whether Leopoldo will ask Ferrovial to purchase him out at a price below the price at which the shares are trading, it is possible that the sale of his stake will derail the relocation plan.

‍

As a construction company that opened in 1952, Ferrovial grew over the decades from a modest railroad construction company into one of the world’s leading conglomerates. It was awarded contracts to build the Olympic stadium in Barcelona, the Seville Expo and the Bilbao Guggenheim. 

‍

With a 58% majority shareholding in Ferrovial, the siblings decided to transfer a part of the holding they had previously owned through an investment vehicle, Casa Grande de Cartagena, into a single holding company, Portman Baela, which is managed by one of them.

‍

Del Pinos voted in concert due to their unified stake, but tensions soon arose regarding the company's management. It was only in 2015 that the alliance crumbled when the family broke its shareholding agreement and split the shares among its siblings, and each member thereafter exercised his or her voting rights independently.

‍

The board seat had been vacated by Leopoldo after the split.

‍

A second sibling, Fernando, broke from the family office in the 2000s, and set up his own investment company, Myway, which doesn't hold any stake in Ferrovial either. Fernando retired from the family business in 2009. 

‍

There have been several family members who have decided to step down as directors in Ferrovial in 2019 since Joaquin was the latest sibling to do so, leaving Rafael, the chairman, and Maria, who runs the foundation in which the family is investing, to be the only family members left on the board.