The National Court forces the CNMV to raise the price of FCC’s takeover to Portland by 71%

  • The judge figures at 10.29 euros the fair price that should have been offered
  • Santander’s role in the valuation operation is questioned

The National Court has annulled the price set by FCC and approved by the National Securities Market Commission (CNMV) for the exclusion bid launched in 2016 by the construction company against Cementos Portland -6 euros-, considering it unfair, and urges the supervisor to recalculate it to 10.29 euros.

In December 2016, the CNMV authorized the delisting takeover of the Portland shares, operation presented in July 2016 and admitted for processing in August of that year; FCC then owned, directly and indirectly, 40,357,460 shares of Cementos Portland Valderrivas, representing 77.93% of its capital stock.

Soon after, some Minority shareholders They presented an appeal before the National High Court, which is the one now considered by the third section of the contentious-administrative chamber. The CNMV authorized the takeover bid under the terms offered by FCC, 6 euros per share, a price that the National Court, in sentence dated April 5, considers “that it is not equitable”.

In this case, it was Santander which in its valuation report determined the fair price of the takeover bid, between 4.95 and 5.50 euros per share, so the 6 euros set were fair.

But the judges have estimated that “it is not justified why it was not required by the CNMV the use of the fair price valuation method using the notional book value, used other times and always considered appropriate by the CNMV ”.

The plaintiffs, for their part, did take into account the theoretical book value, which had been the used by the auditor in the annual accounts, and that was 10.29 euros.

Magistrates have detected a conflict of interest Santander being in charge of the valuation, since this entity was the global agent for FCC’s financing, guarantor of the takeover bid and intermediary and liquidator, so “it is reasonable” that it had a special interest in the period being the lowest possible.

Denying that conflict of interest by claiming the existence of different departments or divisions in the organization of the large entity and that they function autonomously, what is known as “Chinese walls”, the sentence continues, “is to deny the evidence.”

Even if the law does not prohibit the provision of services when there is a conflict of interest, “When that conflict exists and it is shown that the action carried out by the disputed and debatable service provider entity”, it is necessary to invalidate, “due to lack of objectivity and fairness”, the flawed action. And that is what the CNMV should have done at the time.