Grifols and Brookfield negotiate a joint takeover bid for the pharmaceutical company

Grifols and Brookfield negotiate a joint takeover bid for the pharmaceutical company
Grifols and Brookfield negotiate a joint takeover bid for the pharmaceutical company

The Grifols family and the Canadian fund Brookfield they arrived to an agreement to evaluate a possible joint takeover bid for the entire share capital of Grifols whose purpose would be the exclusion of the company from tradingThe news, reported by ‘Cinco Días’, was confirmed by the company on Monday. The National Securities Market Commission (CNMV) Grifols was suspended before the opening. It was back on the market at 12 noon and shot up by 9.7% (9.86 euros).

Grifols has notified the CNMV that this Sunday, July 7, The Board of Directors of the company met in an extraordinary session after receiving a request from family shareholders of Grifols and Brookfield to allow access to certain information of the company to carry out a ‘due diligence’ process in relation to a possible acquisition of Grifols shares.

“It was reported to the Council that the purpose of the transaction would be the exclusion of the company from listingif it is finally carried out,” says the statement sent to the regulator. The company would cease to be listed on both the Spanish Stock Exchange and the Nasdaq.

Grifols added that, as of today, it does not know whether or not this operation will be carried out and He is “completely” unaware of the terms under which, if applicable, this could be carried out.

For its part, Brookfield has detailed that it has held discussions with reference shareholders represented in the companies Scranton Enterprises, Deria, Ponder Trade y Ralledor Holding Spain. He has indicated that he has reached a goal with them exclusivity agreement to continue evaluating the potential operation.

Brookfield has also wanted to make it clear, also through a communication to the CNMV, that there is no no agreement or decision in relation to the potential transaction or its terms or conditions.

“Does not exist There is no guarantee that Brookfield or the reference shareholders will make an offer for Grifols shares.. Any new developments will be communicated to the market in accordance with the provisions of the applicable regulations.”

A PARTNER TO LEAVE THE GOTHAM CRISIS BEHIND

According to Council sources cited by ‘Cinco Días’, the family has sought a partner for design a satisfactory strategy After the suffering that Grifols has endured due to Gotham City Research hedge fund attackwhich has caused the stock market to plummet this year. Brookfield is one of the largest funds in the world, with more than 250 billion euros in liquidity.

The positive impact on the stock market would be limited “or even non-existent” if it were confirmed that the offer is similar to the current capitalisation

This would be the first operation that Brookfield carries out in Spain outside the infrastructure and real estate sectors. In our country it owns the renewable energy company X-Elio and also renewable Site Yield.

With the takeover bid, the Grifols family is seeking to have the support of a large fund to to be able to support its new era in management which has opened in recent months and which means that the family itself has stepped aside and that its directors, Raimon and Víctor Grifols, have left their executive functions to become proprietary directors. This agreement would also allow easing financial tensionswith more than 3 billion maturities in 2027. ‘Cinco Días’ recalls that this is not the first time that the Grifols family has considered joining forces with private equity. In 2022, it sounded out KKR or CVC to carry out a capital increase.

As for the composition of Grifols’ shareholders, the family and other executives control around 30% of the capital, distributed among various companies. The next largest shareholder is the fund Capitalwhich has 4.5%, followed by BlackRockwhich owns another 4.3%. The shareholding also includes the funds Europacific (3,2%) y Rokos Capital (1,1%).

“UNREALISTIC”, SPECULATIVE…

Sabadell experts evaluate the news and, a priori, They consider a takeover bid for an amount equal to the company’s current capitalisation (5.5 billion), as ‘Cinco Días’ is considering, to be “unrealistic”, since it would undervalue the company.. Grifols, as noted above, has said it is unaware of the terms of the transaction.

A takeover bid in line with current share price levels “significantly undervalues ​​the company” as it would not offer “no kind of premium after having fallen by 42% in 2024“.

Sabadell adds that this amount would also be far from the 84% revaluation that its target price (16.54 euros) indicates.

Bankinter, for its part, highlights the speculative nature of the news and says that the positive impact would be limited “or even none” If it is confirmed that the valuation proposal is similar to the current capitalization.

“We would like to remind you that on January 9 we lowered our recommendation to ‘sell’ from ‘neutral’ and put our target price under review. Since then, the share price has fallen by 37% and is expected to decline by 42% in 2024,” writes Pedro Echeguren, analyst at Bankinter.

For Renta 4 experts, the motivation of the Grifols family and Brookfield to carry out this operation It is understandable given what Grifols has gone through with Gotham and the price at which it is trading after the falls. As for its possible delisting, these analysts say that This will allow the company to consolidate its strategy of recovering results and deleveraging without being subject to market volatility.

“Additionally, the agreement with a financial partner of the Brookfield entity we understand that would reduce pressure on the company’s refinancing needs“, says Alvaro Aristegui, analyst at Renta 4.

XTB also emphasizes the offer conditions and says that the success of the operation will depend on these.

The offer price must be higher than the market price. The consensus of analysts gives it a revaluation potential of 76.8% and We find it very difficult for the exclusion premium to reach these levels”says Joaquín Robles, XTB expert.

“We understand that the largest shareholders want to try to delist it so as not to be exposed to the volatility it has suffered since the report published by Gotham City Research, but We believe that it will be difficult for them to meet the expectations of the rest of the shareholders.“.

 
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