Brookfield cancels its attempt to acquire . In a relevant fact sent to the National Securities Market Commission (CNMV), the fund indicates that, after having carried out a due diligence exhaustive and taking into account the reactions of the Grifols Transaction Committee and the pharmaceutical company’s board of directors regarding the potential offer that were communicated to the market on November 19, 2024, “this morning Brookfield has informed the Grifols Transaction Committee that in the current circumstances it is not in a position to continue with a potential offer for Grifols.”
Since July, the Canadian fund had been exploring a takeover bid by different members of the founding Catalan family for the blood products company. The market has once again drawn blood with the pharmaceutical company on the stock market. The action began the session, after the first speculation about Brookfield’s decision, with sharp falls, which later sharpened to exceed 14% at midday, falling to 9.18 euros, more than 12% below what the Canadians offered. This year, the titles have plummeted more than 38%.
The background. It proposed a valuation of the company at a rate of 10.5 euros per share, with a total value of 6,450 million euros. The board of directors – which has a committee appointed to monitor the takeover, which excludes family members – rejected the bid, considering it too low and significantly undervaluing the company’s fundamental prospects and its long-term potential. Therefore, he stated that, if the offer went ahead, he would recommend that shareholders not attend the bid.
The Grifols family is not going to support a new offer from a third party to acquire the manufacturer given Brookfield’s possible decision. “We are very satisfied with all the letters we have received from current shareholders, who tell us that the company is worth more, and we will continue working so that the value of the company increases even more,” indicate sources close to the Catalan family.
Sources from the pharmaceutical company did not want to comment on this possible move. Other sources in the sector do not rule out that the National Securities Market Commission (CNMV) may request the Canadian fund to provide more information.
The company is thus left in a delicate situation. It has been in the spotlight of investors since last January, when the bearish Gotham City fund published a devastating report in which it accused the company of cooking up its accounts and valued its shares at zero euros. This caused a collapse in the share price and put pressure on the refinancing that the company must do in the coming years, with a total liability of more than 10,000 million.
In this context, Brookfield agreed with the Grifols family to explore a joint delisting takeover bid, to take the company private and give it time to recover, as this newspaper exclusively published. In July he agreed with the company to open the books, which have lasted for four months, without reaching an agreement, as reported by the Bloomberg agency. A Brookfield spokesperson declined to comment to this newspaper.
The market, after Brookfield’s withdrawal, . The stock began the session with sharp falls this Wednesday, which later dropped to exceed 11% and hit 9.43 euros, 10% below what the Canadians were offering. This year the titles plummeted 36%.
The transaction also forced Brookfield to undertake a large refinancing of the liabilities, since most of the debt had change of control clauses that required refinancing if the company changed hands. Thus, at the same time they were doing the work to value the company, with a good group of investment banks, led by Bank of America, Deutsche Bank, Santander, Barclays and DNB.
This complicated the valuation that Brookfield could achieve, since it increased the total ticket for the transaction. To reduce this, the fund had sounded out large international investors, mainly sovereign funds from the Middle East, to co-invest in the company and take small stakes. The family also proposed participating in the operation and maintaining its 30% in the capital, which reduced the acquirer’s offer.
Now, the company is forced to explore new alternatives. In the past it has spoken with other venture capital funds to explore a corporate operation, conversations that may now be on the table again. Or also recover the negotiation with Brookfield where it left off.
Analyst pressure
The price offered by Brookfield has been rejected by various analysts from relevant financial institutions. Among others, Sabadell warned last week that the price undervalued Grifols, recalling that it was 36% below its target price. The bank also pointed out the “evident disconnection between the company’s fundamentals and the price,” as well as the favorable operating perspectives. Kepler also stated that Brookfield should launch a takeover bid with a higher price, or improve it later if it does not reach enough approval to delist the company.
In general terms, the average target price of the analysts who follow Grifols is around 16.40 euros, with entities such as Santander, which gives the pharmaceutical company a target price of 27 euros per share, for 19.40 euros from Berenberg, 18.70 euros from CaixaBank BPI and 18.40 euros from JB Capital Markets.
The market also remembered that the company’s shares, with a secured business in a strategic segment such as plasma treatments, were trading at the beginning of 2024 at around 15 euros, just before the attack by the bearish firm Gotham City. Research, which accused Grifols of beading.
In parallel, Grifols management has defended the good evolution of the company’s results throughout 2024. In the presentation of the third quarter accounts, Nacho Abia, CEO since last April, and who in September assumed all executive functions, highlighted the increase in income of over 9% between January and September, the obtaining of 88 million euros of profits after the red numbers of 2023 and the reduction of debt. The executive defended Grifols’ “solid fundamentals,” the strong underlying demand in the US and the European Union (EU) in the plasma industry, and the company’s acceleration of R&D projects to expand its product offering. .
