LONDON/MADRID/BARCELONA – The Grifols family and Canadian fund Brookfield have agreed to evaluate a possible joint takeover bid for beleaguered Spanish drugmaker Grifols (NASDAQ: GRFS) with the intent to delist it, the companies said in regulatory filings on Monday.
Grifols said its board held an extraordinary meeting over the weekend to study a preliminary offer presented by Brookfield and the Grifols founding family, which holds a stake of around 30%, according to the latest data by Spanish securities regulator CNMV.
Brookfield and the family have asked the board for access to certain company information for due diligence before potentially buying all of Grifols’ shares, Brookfield and Grifols said in the filings.
Brookfield is considering investing more than 5 billion euros ($5.41 billion) in Grifols, with part of that amount to refinance and restructure the company’s debt, according to a source close to the conversations.
The Canadian-based fund will carry out the deal alongside other investors in its funds, the source said.
The Grifols family is not planning to sell its stake, the source said.
Grifols’ net financial debt reached 10.9 billion euros in the first quarter of this year, around 400 million euros higher than in the prior quarter.
Grifols and Brookfield declined to comment.
The conversation between the Grifols family and Brookfield started more than a year ago, the source said, before short-seller fund Gotham City Research released several reports that have erased a third of Grifols’ value.
Grifols’ shares closed 9.7% higher on Spain’s blue-chip index Ibex 35 on Monday.
The deal could be worth around 5.5 billion euros ($5.96 billion), according to Cinco Dias newspaper which first reported on the deal.
Grifols’ market capitalization reached 6.2 billion euros on Monday.
Brookfield said the talks over the joint offer could end with Grifols delisted from the Spanish stock exchange and the Nasdaq.
“There is no agreement or decision regarding a potential transaction or the related terms and conditions,” Brookfield said, adding there was no guarantee there would be a final offer.
Grifols also said it did not know if a transaction will take place or the terms under which it could be carried out.
Its main shareholders – in addition to the descendants of the three brothers who took the company from a small family-owned lab in Barcelona to a global player in the plasma derivatives business – include the funds Capital Research and Management Company, BlackRock, Europacific Growth Fund, and Rokos Global Macro Master Fund, according to Spain’s stock market regulator.
Since early January, short-seller fund Gotham City Research has released several reports accusing Grifols of overstating earnings and understating debt.
Following the reports, Grifols announced governance changes and revised its reported leverage higher aftermarket supervisor CNMV required that it change its calculations.
Last week, Grifols appointed Rahul Srinivasan as chief financial officer in a management reshuffle and Scranton Enterprises, an investment vehicle partly tied to the Grifols family, reached an agreement with a private investor to refinance 377 million euros of debt in one of its units.
(Source: ReutersReuters)
Brookfield Grifols NASDAQ: GRFS NYSE: BAM The Grifols family
