Ismael Clemente and Santander give a truce. Although, it could be said that for the moment this battle has been won by the Extremadura manager, since he remains the CEO of Merlin Properties. This has been decided by the Socimi Board of Directors after a meeting that began at seven in the afternoon yesterday and that lasted for more than three hours.
According to the notification sent by the company to the CNMV, Merlin’s Board of Directors “has unanimously adopted an agreement to initiate a governance reform process, with the aim of improving it in the interest of Merlin and all of its shareholders” .
According to this message, both parties have had to give in their discrepancies for the good of the company, since at the close of the trading day on Monday, the securities of the Socimi plummeted 6.3%, which is its biggest drop in a single session since May 2020.
Samples of endorsement by the different institutional investors who have sent letters to the board as well as the support shown by the entire management team and Merlin’s staff would have tipped the balance between independent directors, who on this occasion had a decisive role, in favor of Clemente.
In addition, the “unconditional” support of the staff and the executive leadership towards Clemente led to the expectation that if he was dismissed from his position Merlin would probably witness a major talent drain in the coming days, since part of the management team could resign to leave the company together with Clemente, thus causing a significant hole in the Socimi’s operations.
On the Merlin board sit, on the one hand, García-Carranza, Francisca Ortega and Ignacio Gil-Casares on behalf of Santander, which has 22.2% of the capital and is the main shareholder, although not the majority. On the other, there is Ana Forner in representation of Nortia, with 6.3% of the capital and that according to sources in the sector would be holding back some of García-Carranza’s decisions that are detrimental to the management team.
Two other chairs are occupied by Miguel Ollero and Clemente as executives. The remaining seats are for seven independent directors: Emilio Novela, Pilar Cavero, Fernando Ortiz, Ana García Fau, Maria Luisa Jordá, Juan María Aguirre and Donald Johnston.
In their communication to the CNMV, “the Board of Directors, its chairman and its CEO expressly express their rejection of the content of the news that appeared in the different media in recent days, and, in particular, those disqualifications against certain shareholders and directors of Merlin “
“Likewise, the Board of Directors, its president and its CEO, reiterate their mutual respect and their express decision to implement precise mechanisms and concrete measures for management in accordance with the best governance of the Company.”
These demonstrations clash squarely with the letter sent this afternoon by the management committee to the Merlin Board of Directors, which they titled “no to corporate feudalism.”
Thus, the letter pointed out that “Merlin does not deserve abusive and feudal behavior by minority shareholders that they intend to exercise majority control, stealing their participation in decision-making from the rest of the shareholders, thus saving the payment of the corresponding premium. “
The letter, which although it does not cite names, refers to the position of Santander, Merlin’s main shareholder with 22.2% of the capital, according to sources in the sector. Thus, they point out that “If any shareholder wishes to control Merlin, they will have to make the corresponding public offer and pay the rest of the shareholders the fair market value.” and they conclude by stating that “our management team will look after the interests of society until the end, with the support of the staff. We will not give in to abuse.”
The origin of the disputes
That the tension between Javier García-Carranza and the Socimi’s top management was palpable in recent months was no secret in the cliques of the sector, since it is a problem that Merlin had been dragging on for quite some time. The truth is that García-Carranza’s animosity towards Ismael Clemente and the top leadership dates back more than two years ago, according to sources close to the Socimi management team. the Economist, which ensure that the beginning of this bad relationship starts from a specific event.
Thus, they point out that the attitude of García-Carranza towards Ismael Clemente, Miguel Ollero and David Brush, all of them founders of Merlin, changed after they showed themselves against an initiative that the president of the Socimi planned to carry out. Specifically, they ensure that García-Carranza told them “his intention to exclude Merlin from listing and place the assets in funds managed by Santander with the aim of achieving perpetual income for the bank in the form of management commissions.”
The same sources assure that the executives warned him that this would require an exclusion bid and that this “was incompatible with the intention that he had to buy cheap assets”, as García-Carranza had supposedly transferred to them. Despite the refusal of the three directors, the answer that most bothered the president of the Council was that of Brush, “against whom he started a crusade,” the same sources say.
In fact, they say that the departure of Brush, Merlin’s executive director and investment director, last February, which “masked himself as a retirement would have been driven by García-Carranza’s constant rejection of Brush’s initiatives.”
Banco Santander declined to comment on this controversy. Although other sources from Merlin’s Board of Directors assure the Economist that García-Carranza was not alone in his intention to dismiss Ismael Clemente as CEO of the Socimi. Thus, they ensure that “This is not a crusade that the entity has against the manager, but there are other directors who agreed with this exit.” In addition, they point out that “it would not be a personal matter, if not an attempt to professionalize the company in terms of governance, reaching more appropriate standards for an Ibex35 company.”
From the top management of Merlin and other sources in the sector assure for their part that García-Carranza has been in charge of “gradually laminating the skills of Clemente and his team, attacking first the salaries and later canceling their management powers, that little by little he has been assuming “. Thus, Clemente has seen his decision-making power in the Socimi diminished to such an extent that he needs the authorization of the Board for any purchase or sale or debt-related operation, whereas before there was a limitation of 150 million euros.
The last blow to the Extremaduran executive took place just a month ago when García-Carranza obtained the support of the Council to dissolve an advisory committee for communication and digitization issues that had been personally in charge of training Clemente with renowned businessmen in this field such as Javier Rodríguez -Zapatero, president of ISDI or Fernando Abril, former CEO of Indra, among others.
The crisis of power in Merlin undermines the foundations of value in the Socimi
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