Carlos Slim aspires to take control of Metrovacesa with FCC and once he achieves it among his plans, the delisting of the promoter is imposed, as confirmed by various sources in the sector to elEconomista.es. This movement would be strategic in order to later be able to propose a corporate operation to integrate Metrovacesa and Realia, the real estate company that Slim already controls, through FCC, with a 75.12% stake.
FCC, controlled by the Mexican magnate, is currently the third shareholder of Metrovacesa with 20.24% of the capitalbehind Banco Santander and BBVA, which have 49.36% and 20.84%, respectively.
The key for Slim’s plans to be fulfilled is in the drawer of the entity chaired by Carlos Torres, with which the Mexican businessman would have already started conversations with a view to the future takeover bid (takeover bid) that it intends to launch through FCC to take control of Metrovacesa, as confirmed by the same sources.
That Slim started his offensive through BBVA is not by chance, since the bank would be in a position to get out of the promoter’s shareholding and would also have it much easier than Santander. This is because the book value of its stake in Metrovacesa is 59.14% lower than that registered by the bank led by Ana Botín. Since the promoter went public in February 2018, BBVA has been devaluing the net value of its investee. Specifically, five years ago the entity recorded in its books a value of 508 million for its 20.85% of Metrovacesa. At the end of 2022, the valuation has fallen to 259 million, which represents a decrease of 49% and sets a price per share of 8.2 euros.
Santander includes in its books a value of 979 million at the end of 2022 for its 49.36% stake in Metrovacesa
For its part, Santander includes in its books a value of 979 million at the end of 2022 for its 49.36% stake in Metrovacesa. This figure implies a value per title of 13.08 euros; that is, 59.14% higher than BBVA and 82.2% higher than the current price of the promoter, which closed this Monday at 7.18 euros, after scoring a rise of 0.28%.
The option to exclude Metrovacesa from the stock market would make sense in view of a possible corporate operation with Realia, since today the promoter directed by Jorge Pérez de Leza is trading at a discount to net asset value (NAV) of 48.9%which would significantly hinder any subsequent corporate movement.
A takeover bid for 100% of Metrovacesa would take the operation to 862 million taking into account current prices
The other two large listed companies in the residential sector are in a similar situation, as well as the two large REITs, which are even listed with superior discounts that reach 60%. In fact, Metrovacesa would not be the only developer that is in the crosshairs of an exclusion, since the main shareholder of Aedas Homes, Castlelake, is also studying this possibility, as this media reported.
At the close of this Monday, Metrovacesa had a capitalized value of 1,089 million euros, so the 30.76% of the capital that Slim needs to acquire to take over the majority of the developer has a market value of 335 million. A takeover bid for 100% of the company would take the operation to 862 million considering current prices. Realia, for its part, capitalized this Monday 853 million.
FCC has a solid financial position to undertake acquisitions, recently reinforced with the sale of 24.99% of its environmental subsidiary to the Canadian fund CPPIB for 965 million. Part of this liquidity will be used to carry out a takeover bid on its own shares, with the aim of obtaining a maximum of 32,027,600 shares, 7% of the capital, to redeem them. The decision, approved by the board of directors last Wednesday and which will have to be approved at an extraordinary meeting on July 19, contemplates a premium of 38% compared to the price of that day, so that the disbursement would exceed 400 million.
As the CEO of Metrovacesa explained last week during the Real Estate conference at elEconomista.es, a large part of the discount “is cyclical due to the uncertainty that surrounds us, not only macroeconomic, but also in the real estate sector, interest rates, of the United States…” Pérez de Leza believes that “when this uncertainty passes, and it will pass, the prices will be better.” “Meanwhile,” he adds, “on the way we have elements of shareholder remuneration that in some way stifle or alleviate this discount and we are focused on that at Metrovacesa”.
Shareholder remuneration has been part of the promoter’s DNA since its inception, which has led it to become the most profitable dividend for a company outside of the Ibex. Thus, last year Metrovacesa distributed more than 250 million euros, while in the six years of life of the real estate company the remuneration reaches almost 400 million, 25% of the value of the company.
This is how Slim has climbed
Until just over a year ago, Slim had barely 5.4% of Metrovacesa. It was in March when, through FCC, it launched a voluntary takeover bid with the aim of reaching 29.4% of the capital. Thus, the offer was intended for a maximum of 36,402,322 titles of the promoter, representing 24% of its capital, at a price of 7.2 euros. For the talks with BBVA to be fruitful, Slim would have to offer a more attractive price than the one he put on the table at the time, since at the time both the company’s board and the two entities rejected the operation, considering that the value offered by Slim did not adequately reflect the intrinsic value of the Metrovacesa shares. Slim managed to convince a minority group representing 11.47% of Metrovacesa’s capital, which led FCC to reach 16.87%. After the dividend that Metrovacesa delivered last December, which allowed payment through the delivery of new shares, Slim reached 20.24% in the promoter.