Grifols Founding Family and Brookfield team up for potential €5.5B takeover bid

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on Jul 8, 2024
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  • The Grifols family, with a nearly 30% stake in the company, partnered with Brookfield to launch the takeover.
  • Spanish regulatory body CNMV suspended trading in Grifols shares on the blue-chip index.
  • Traders were expecting a rise in share price following the takeover news.

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The Grifols founding family and Canadian alternative asset manager Brookfield have joined forces to launch a potential takeover bid for Spanish pharmaceutical company Grifols. T

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he move, if successful, would result in Grifols being delisted from the stock exchange.

Grifols board considers preliminary offer

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On Monday, Grifols announced in a regulatory filing that its board of directors convened over the weekend to evaluate a preliminary takeover offer submitted by Brookfield and the founding family, who currently hold nearly 30% of the company’s shares.

The proposal involves granting access to specific company data to facilitate due diligence, paving the way for a potential acquisition of all outstanding Grifols shares.

Trading halt and speculation

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The announcement triggered a suspension of Grifols’ shares from trading on the Spanish benchmark index, the IBEX.

This decision by the Spanish securities regulator, CNMV, came shortly before the market opened. Prior to the suspension, traders anticipated an increase in Grifols’ share price of around 8% to 10%.

Founding family’s next steps

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According to a report published in Spanish business newspaper Cinco Dias on Sunday, the founding family seeks access to Grifols’ financial records to formulate a final offer within the coming weeks.

The report additionally states that Lazard is acting as the sole financial advisor for both parties involved in the potential takeover.

Potential deal value and unanswered questions

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While Grifols did not disclose the potential value of the transaction, Cinco Dias estimates it could reach €5.5 billion (approximately $5.96 billion).

The company’s statement also acknowledged the uncertainty surrounding the potential transaction’s outcome and its specific terms.

Grifols’ shareholder landscape and recent challenges

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Grifols’ major shareholders include prominent investment firms Capital Group, BlackRock, Europacific, and Rokos Global, alongside the founding family descendants who transformed the company from a small, family-run laboratory in Barcelona into a global leader in the plasma derivatives market.

Grifols has faced significant challenges since early 2024. Short-seller Gotham City Research released a series of reports accusing the company of inflating earnings and downplaying debt levels. These accusations resulted in a decline of Grifols’ market value by several billion euros.

In response to the short-seller reports, Grifols implemented governance reforms and revised its reported leverage figures upwards, following revisions mandated by the CNMV. The company appointed a new chief financial officer, Rahul Srinivasan, as part of a recent management reshuffle.

Last week, Scranton Enterprises, an entity linked to the Grifols family, refinanced €377 million of debt within one of its units through an agreement with a private investor.

The potential takeover bid by the Grifols family and Brookfield casts a veil of uncertainty over the future of the Spanish drugmaker.

While the details and outcome of the bid remain unclear, it has undoubtedly triggered significant developments for Grifols, its investors, and the broader pharmaceutical industry.

Spain Health & pharma Mergers & Acquisitions Stock Market