Ismael Clemente and Santander have a truce. Although, it could be said that for the moment this battle has been won by the director from Extremadura, since he remains CEO of Merlin Properties. This has been decided by the Socimi’s Board of Directors after a meeting that began at seven in the afternoon yesterday and lasted more than three hours.
According to the notification sent by the company to the CNMV, the Merlin Board of Directors “has unanimously adopted the agreement to initiate a governance reform process, with the aim of improving it in the interest of Merlin and all its shareholders” .
As can be deduced from this message, both parties have had to give in to their discrepancies for the good of the company, since at the close of business on Monday the titles of the SOCIMI plummeted 6.3%, which represents their biggest drop in a single session since May 2020.
The signs of support from the various institutional investors who have sent letters to the board, as well as the support shown by the entire management team and staff of Merlin, would have tipped the balance between the independent directors, who on this occasion had a decisive role , in favor of Clement.
In addition, the “unconditional” support of the staff and the management leadership towards Clemente led to the expectation that if he were dismissed from his position, Merlin would probably witness a significant drain of talent 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 representing Santander, which has 22.2% of the capital and is the main shareholder, although not the majority. On the other, there is Ana Forner representing Nortia, with 6.3% of the capital and who, according to industry sources, 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 rest of the 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 its communication to the CNMV, “the Board of Directors, its chairman and its CEO, expressly express their rejection of the content of the news that has 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 chairman and its CEO, reiterate their mutual respect and their express decision to implement precise mechanisms and specific measures for management in accordance with the best governance of the Company”.
These demonstrations clash squarely with the letter that this afternoon the management committee sent to the Merlin Board of Directors and which they titled “no to corporate feudalism.”
Thus, the letter pointed out that “Merlin does not deserve abusive and feudal behavior by minority shareholders who intend to exercise majority control by stealing from the rest of the shareholders their participation in decision-making, thus saving themselves the payment of the corresponding premium”.
The letter, which although it does not mention 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 wants to control Merlin, they will have to make the corresponding public offer and pay the rest of the shareholders the fair market value” and conclude by stating that “our management team will look after the interests of the company 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 leadership of the socimi was palpable in recent months was no secret in the circles of the sector, since it is a problem that Merlin had dragged on for quite some time. The truth is that García-Carranza’s animosity towards Ismael Clemente and the leadership goes back more than two years, according to sources close to the Socimi’s management team, who assure that the beginning of this bad relationship part of a specific event.
Thus, they point out that García-Carranza’s attitude towards Ismael Clemente, Miguel Ollero and David Brush, all of them founders of Merlin, changed after they were against an initiative that the president of the socimi planned to carry out. Specifically, they assure that García-Carranza expressed “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 fees.”
The same sources assure that the executives warned him that this would require an exclusion bid and that “it was incompatible with his intention to buy the cheap assets”, as García-Carranza had supposedly transferred to them. Despite the refusal of the three directors, the response that bothered the President of the Council the most was that of Brush, “against whom he initiated a crusade”, the same sources assure.
In fact, they say that the departure of Brush, executive director and director of Investments at Merlin, last February, which “dressed up as a retirement would have been driven by García-Carranza’s constant rejection of Brush’s initiatives.”
Banco Santander declined to make any statements regarding this controversy. Although, other sources from the Merlin Board of Directors assure elEconomista that García-Carranza was not alone in his intention to dismiss Ismael Clemente as CEO of the socimi. Thus, they assure that “this is not a crusade that the entity has against the director, but rather that there are other directors who agreed with this departure.” In addition, they point out that “it would not be a personal issue, but rather an attempt to professionalize the company in terms of governance, reaching more appropriate standards for an Ibex35 company.”
From the leadership of Merlin and other sources in the sector, they assure for their part that García-Carranza has been in charge of “little by little laminating the skills of Clemente and his team, first attacking salaries and later annulling their management faculties, little by little he has been assuming”. Thus, Clemente has seen his decision-making power in the socimi reduced to such an extent that he needs the authorization of the Board for any purchase or sale operation or one related to debt, whereas before there was a limitation of 150 million euros.
The last blow to the director from Extremadura occurred 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 forming Clemente with renowned businessmen in this field such as Javier Rodríguez -Zapatero, president of ISDI or Fernando Abril, former CEO of Indra, among others.
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