Brookfield fund delays Grifols takeover bid for second time
28.10.2024
Written by: Bankinter Analysis Department
Bankinter's Analysis Department offers you an analysis of the latest news on the Spanish company:
Latest relevant news from Grifols
Brookfield fund delays Grifols takeover bid for second time
10/28/2024
Fails to raise the c. €10 billion needed to acquire 70% of the company and restructure the debt .
Bankinter's opinion
Negative news that casts doubt on whether there will be a takeover bid for Grifols . On July 8, we learned that Brookfield was considering launching a takeover bid for Grifols, almost four months have passed since then. At the end of September, the fund asked the Grifols family for more time to analyze the takeover bid or seek financing . This new delay increases the uncertainty about whether Brookfield will present an offer for Grifols. If the fund refuses to present the takeover bid, it would have negative effects on the share price of Grifols. We reiterate our Sell recommendation.
Previous news from Grifols
Brookfield fund asks for more time to analyze the takeover bid
01/10/2024
The fund has sent a letter to the Council requesting an extension to allow it to continue analysing this possible offer.
The CNMV files proceedings against Grifols, Gotham and the General Industrial Partners (GIP) fund for very serious infringements.
09/26/2024
In the case of Grifols, according to the CNMV, the Company and the group would have provided information "with inaccurate or untrue data or that omits relevant aspects of compliance " with accounting standards in the annual reports for 2021, 2022 and 2023, as well as in the accounts for 1H 2024. It also finds untrue or misleading information regarding the method of calculating some alternative performance measures and incomplete explanations and lack of inclusion of related-party transactions. Regarding Gotham and GIP, according to the CNMV, it points out that they would have manipulated the market and would have skipped the obligations established in the regulation on market abuse regarding stock recommendations, behaviors that could have criminal consequences.
Glanzmann steps down from executive duties but remains non-executive chairman
09/24/2024
He moves from executive to non-executive chairman. CEO Ignacio Abia assumes full executive responsibility .
Brookfield fund extends the study process for another month to decide whether to present a takeover bid for Grifols
09/23/2024
Brookfield has not obtained the necessary funds to present the takeover bid nor has it reached an agreement with the banks to refinance Grifols' debt, which amounts to around €10 billion.
A group of funds are asking for an advisor to oversee the possible takeover bid of the Brookfield fund
09/20/2024
The Flat Footed, Mason Capital Management and Sachem Head funds jointly control 7.7% of Grifols and have asked for a seat on the Grifols board. Their aim is to monitor the process of the takeover bid that Brookfield is considering and to ensure that a high premium is paid.
The Spanish Ministry of Health announces a competition to acquire plasma
11/09/2024
It will purchase plasma for a price not exceeding €281M over two years through a public tender to which Grifols, CSL and Takeda are expected to participate. The result of the tender will be announced on 19 November.
Brookfield fund makes its takeover bid for Grifols conditional on paying less for Class B shares
05/09/2024
Grifols' bylaws provide that in the event of a takeover bid, Class B shares will receive the same price as Class A shares. There are also differences in the economic (dividends) and political rights between the two classes. Class B has historically traded at a discount of -30%/-40% compared to Class A, and the statutory requirement increases the cost of the takeover bid.
Brookfield seeks support for its takeover bid on Grifols from several sovereign funds
04/09/2024
The scheduled date was next October 10. The reason given is the negotiations with the Brookfield fund to launch a takeover bid for the Company's shares.
Brookfield seeks support for its takeover bid on Grifols from several sovereign funds
08/30/2024
According to El Economista ( Link to the news ), Brookfield is in talks with sovereign wealth funds from Singapore and the United Arab Emirates to participate in this takeover bid. The fund is also seeking to refinance €9.5 billion of debt.
Moody's has stopped rating Grifols' debt because it believes it has "insufficient or inadequate" information to maintain its ratings.
07/16/2024
The agency has withdrawn Grifols' corporate rating of 'B3' and its probability of default rating of 'B3-PD' and the other ratings (senior unsecured debt, secured debt and bank credit lines ). Prior to the withdrawal, the outlook was 'stable' for all ratings. The Company continues to collaborate with S&P and Fitch.
A committee of the Board of Directors composed of independent directors is set up to monitor the development of the potential Brookfield takeover bid. Two independent directors resign.
07/15/2024
The committee has appointed legal advisors and will channel the information to be provided to Brookfield in view of the possible presentation of a takeover bid. Carina Szpilka (coordinating director) and Claire Giraut resign as directors.
Brookfield could offer around €10/share in the takeover bid for Grifols
10/07/2024
According to several media outlets (news to be confirmed), the amount of the takeover bid for Grifols being considered by the Brookfield fund could be around €7 billion, although the fund considers this to be quite a wide range due to the need to carry out an assessment and study (due diligence) of Grifols and its prospects.
Brookfield is considering a takeover bid for Grifols
07/08/2024
The Grifols Board of Directors held an emergency meeting this weekend to negotiate a takeover bid with Brookfield for 100% of Grifols. Early today, the Company agreed to hold negotiations with Brookfield, as explained in a relevant fact ( Link to the CNMV ). Market rumours point to a proposed valuation of around €5.5 billion, which would coincide with its capitalisation. Grifols' trading is suspended at the opening of the market.
Moody's cuts Grifols' debt rating to B3 from B2, Fitch maintains it at B+
06/27/2024
Moody's decision is motivated by "weak" liquidity, high leverage (6.8x EBITDA despite the recent sale of 20% of Shanghai RAAS), corporate governance with a "complex and opaque organizational structure", highlighting the related-party transactions between Grifols, Scranton, Haema and BPC, and a "slower than expected" generation of free cash flow. However, Fitch maintained its rating at B+ and improved the outlook from negative to stable.
Shanghai RAAS closes sale of 20% to Haier for c. $1.8 billion
06/19/2024
The capital gain amounts to approximately €250M. The proceeds from this transaction will be used to reduce debt. Grifols and Haier have committed not to transfer shares in SRAAS for a period of 3 years. In relation to Grifols Diagnostic Solutions (GDS), in which SRAAS has a 40% stake and Grifols a 60% stake, provided that Haier maintains a 10% stake in SRAAS in 2024-2028, Grifols has committed to:
(i) achieve an aggregate EBITDA of $850M, and if this target is not achieved, compensate SRAAS with cash in 2029 for a multiplier resulting from the deficit . According to Grifols, GDS has always achieved this EBITDA in the past;
(ii) Grifols will ensure that GDS distributes annual dividends with a pay-out of no less than 50%. Grifols has pledged its remaining 6.6% in SRAAS in favour of Haier, to guarantee the cash pooling agreement between GDS ( creditor ) and Grifols ( debtor ).
Grifols expands its senior secured bond issue to €1.3 billion
05/06/2024
The original amount was €1,000M, to which an additional €300M has been added. The amount will be used to pay the debt that matures in 2025. The interest rate
is 7.5% and the issue matures in 2030. The increase has been successfully completed.
Grifols receives regulatory approvals for the sale of 20% of Shanghai RAAS
07/05/2024
The company and the buyer (Haier) have completed the necessary government approval procedures, both domestic and foreign, from competition authorities and foreign direct investment. The transaction is still subject to confirmation of compliance by the Chinese Stock Exchange . The transaction is expected to close in June 2024.
Grifols issues bonds for 1 billion euros
04/23/2024
This is a private issue of €1 billion senior secured debt maturing in April 2030 with a coupon of 7.5%. The funds obtained from this transaction will be used to amortize the unsecured bonds maturing in 2025.
It plans to refinance part of the debt that matures in 2025
11/04/2024
The Company expects to issue senior secured debt to refinance unsecured debt maturing in 2025.
Clarifies to the CNMV that its operating leverage ratio is 8.4x EBITDA and not 6.3x, which was presented in its 2023 financial statements
05/04/2024
In its clarifications to the CNMV ( see document ), it acknowledges a debt that represents 8.4x EBITDA instead of 6.3x, which was the ratio offered in the publication of its 2023 and 2022 financial results .
Conclusions of the CNMV Report on the accounting of Grifols and its subsidiaries
03/22/2024
The CNMV considers it likely that Grifols will have to restate its financial statements for 2022 and 2023, and requires it to improve the breakdown and explanations it gives to the market. It does not sanction the company. In the report, the CNMV identifies a significant error, several relevant deficiencies and requires Grifols to correct several aspects related to the lack of information . The significant error is the accounting treatment given to the collaboration agreement with ImmunoTek, which should have been recorded as a joint operation and not as a financial investment. In addition, there are relevant deficiencies in two areas : detail and accuracy of the breakdowns and explanatory notes and the presentation of alternative performance measures, in particular EBITDA and the debt ratio . It also identifies that the breakdown information on transactions with related parties, including Scranton and Haema, is insufficient .
Some of these deficiencies have been corrected in the 2023 audit report, published after the issuance of the Gotham City Research report on January 9 and the CNMV's request for information from Grifols.
Actions . The CNMV considers it likely that it will be necessary to restate the profit and loss account due to the significant error. It requires Grifols to :
Include all the information breakdowns indicated .
Publish within fifteen days a detail of the EBITDA and net financial debts of the most relevant entities with non-controlled participations (here Haema or BPC Plasma would be included, consolidated despite not having participation) in order to calculate the leverage ratio.
Within fifteen days, detail the commitments that the entity will assume to adapt the use of alternative performance measures , such as EBITA or the debt ratio.
S&P and Fitch cut their ratings on Grifols debt
03/15/2024
S&P downgrades the rating to B from B+, Fitch downgrades it to B+ from BB-. Both ratings are Speculative Grade. The reason given by the agencies for cutting their credit ratings is debt maturities in 2025.
JPMorgan announces that it has bought a 5.2% stake and the Melquart fund 1.1%
12/03/2024
With this move, which involves an investment of around 250 million euros in Grifols shares, JPMorgan becomes the second largest shareholder in the company after the Grifols family, which controls 31.1%. Short positions represent 2.5% of the capital.
New attack by Gotham City Research
07/03/2024
Gotham City Research published a new note yesterday highlighting a payment on account from Grifols to Haema for 319 million euros that it believes has become a loan between Scranton (a holding company in which several members of the Grifols family are present) and Haema + BPC. Grifols consolidates these two companies despite not having a shareholding, claiming that it controls their boards of directors and that it has a purchase option (which has no expiration date and will probably never be exercised). The payment on account is managed by Haema and BPC as a loan with Scranton and works as a cash pool. Link to Gotham's note . According to Gotham, the management of the payment on account is not explained in the audit or in the last call with analysts and is a new example of the complex and obscure relationships between the company, its subsidiaries and related parties. He also questions the effectiveness of the announced changes in corporate governance (new CEO, departure of family members from the executive team) and believes that these are attempts to give the appearance of reforms, while relations with the group of companies have not been modified or explained . Finally, as he did in his previous note, he launches a list of questions, this time to the independent directors .
Moody's puts Grifols' debt rating on review for downgrade
06/03/2024
The current corporate rating could be downgraded from B2 to B3, while the unsecured bonds would fall to Caa2 and the secured debt to B1. The reasons cited by Moody's for considering a downgrade are the group's weak cash generation, which will be lower than expected following the acquisition of plasma centres in the United States, which will make debt reduction difficult, the delay in the audit of its accounts, doubts about its risk management and its organisational complexity.
Yesterday it fell -35% after the conference call with analysts, with few explanations that did not clear up the open uncertainties
01/03/2024
The decline was -5% before the conference call. The issues that seem controversial to us are:
BPC Plasma (Grifols consolidates it despite not having a shareholding) pays a dividend of 266 million euros to its shareholder Scranton (a holding company, partly (30%?) owned by the Grifols family) supposedly without any cash outflow because it makes the payment by delivering “Other Non-Current Financial Assets” (which can be any type of financial investments, other than cash). It is a movement that has not been explained, but it possibly represents a loss of assets for Grifols' minority shareholders for the same amount, since the counterpart of the Liabilities can only be Shareholders' Equity , in our preliminary opinion, based on the confusing and insufficient information available in this regard. As a reference of an order of magnitude, Grifols' 2023 Attributable Net Profit (BNA) was 59 million euros, an amount lower than this dividend.
The audit is not signed by the auditor , that is, it does not include the auditor's opinion letter, although the Company said in the conference call that it expects to receive it today. In 2024, the auditor changes: from KPMG to Deloitte. We do not know if it has any relation to this or if it is a simple coincidence.
Uncertainty about whether there will be free cash flow in 2024. Despite the fact that the Company itself estimates an adjusted EBITDA of €1.8 billion and had previously stated that it would generate free cash flow in 2024.
Furthermore, we believe that uncertainties remain regarding the aspects that we consider most relevant: the content of the information submitted to the National Securities Market Commission (CNMV) has not been made public, the corporate structure is undefined and commercial relations with related parties and reference shareholders. Consequently, our recommendation remains to sell and our target price remains under review . This has been the case since January 9 (previously neutral), the first day that information questioning the reliability of its accounts began to emerge. Since then, Grifols has fallen -47% (from 14.245 euros to 7.58 euros).
The CNMV continues its analysis of Grifols' accounting
02/28/2024
Following the request for information from Grifols in January regarding its accounts following the report published by Gotham City Research, the CNMV has asked the Company for more information, which has been received and is being analysed. According to the president of the CNMV, it will take a few more weeks to conclude the investigation into Grifols' accounting.
Gotham City Research publishes a list of questions
02/21/2024
There are seven questions that refer to:
Consolidation of Haema and BPC Plasma by both Grifols and Scranton.
Business relations between Scranton and Grifols go beyond office rentals.
Advance payments made by Grifols to Scranton .
Grifols Loans to Scranton .
Details of investments made by Grifols in related companies and whether Scranton is a beneficiary of these.
Scranton Shareholding .
Conducting a forensic audit .
Positive results in a clinical trial with fibrinogen
02/15/2024
This is a phase III trial with fibrinogen from Biotest's portfolio, in which efficacy and safety objectives were achieved that are comparable
with standard treatment to reduce intraoperative blood loss in patients with acquired fibrinogen deficiency.
The Company will publish the results of this trial in the second quarter.
Appoints a new CEO while the Grifols family leaves the Management Committee
06/02/2024
The new CEO, Nacho Abia, will join the company on April 1. Nacho Abia comes from Olympus Corporation , a Japanese company specializing in medical technology, a world leader in diagnostics and minimally invasive treatments, where he was Executive Officer and Global Chief Strategy Officer .
At the same time, Raimon Grifols and VÃctor Grifols Deu are leaving their executive positions as Chief Corporate Officer and Chief Operating Officer , respectively, but will remain as proprietary directors of Grifols. Thomas Glanzmann will continue as Executive Chairman.
The Grifols family could step down from strategic management (according to the press)
02/02/2024
The board of directors is finalizing an agreement with the Grifols family to step aside from the strategic management of the Group, handing over power to the senior management team and independent directors to avoid situations of conflict of interest with their personal companies.
This protocol for the separation of functions must be approved by the appointment and audit committees and by the board of directors.
In addition, it incorporates Roland Wandeler, as the new president of its Biopharma business unit , and Camille Alpi (head of the Human Resources and Talent area) .
Grifols sues Gotham City Research and its founder in the US
01/29/2024
Grifols is seeking financial compensation for the financial and reputational damages caused by the Gotham report.
Haier confirms purchase of Shanghai RAAS to Chinese regulator. Scranton refinances upcoming debt maturity
01/25/2024
Haier confirms that it is continuing with the process of purchasing 20% of SRAAS from Grifols for c. €1.6 billion, which is pending regulatory approvals.
According to El Confidencial, two Spanish banks are refinancing Scranton's upcoming debt of nearly 400 million euros, extending the term for five years.
The CNMV acknowledges receipt of Grifols' response
01/24/2024
In a statement, the regulator stressed that it is proceeding to analyze the documentation provided by the Company, that this process could take several weeks and has not set a date for its conclusion .
It also examines Gotham's conduct and whether it complies with rules on market abuse and the dissemination of misleading information. It adds that the short positions do not have high values and have not determined the fundamental evolution of the stock 's price .
Haier announces that the purchase and sale process for 20% of Shanghai RAAS is continuing
01/15/2024
Both companies expect to close the transaction in the first half of 2024, although it is subject to regulatory approvals.
Grifols shares fall 16% after yesterday's conference call with analysts
12/01/2024
Key news from the conference
- The EBITDA of consolidated companies that are subsequently eliminated through minority interests is around <230M€. The elimination in minority interests amounts to around 120M€ and not the 274M€ estimated by Gotham City Research
- Scranton (Grifols' second largest shareholder with 8.7% of the capital) is not a holding company of the Grifols family . It has 22 shareholders, of which 3 belong to the family . It does not specify whether all the shareholders have the same shareholding. In other words, the shareholding held by the 3 shareholders of the Grifols family is not disclosed .
- Confirms the good evolution of the year 2023 , according to the results guides.
Gotham reduces its short position to 0.06% of the capital. Today the company has called a conference call with analysts
11/01/2024
The short position prior to the publication of the destructive report on Grifols was 0.57%. The company will hold a conference call with analysts today.
After analyzing the Gotham City Research report and the reputational damage it causes, we reiterate our tactical recommendation change from Neutral to Sell.
10/01/2024
Gotham City Research Report released yesterday ( Link to report )
- Questions the debt formally published by the Company and concludes that it exceeds what was declared
- Questions an accounting perimeter with cross-relationships between Grifols companies and the assets of the reference shareholder family
He gives zero value to the shares and recommends not investing in Grifols
The Company has responded by “categorically denying any allegation of misleading accounting practices or misinformation in our consolidated financial statements” ( Link to message ) and a second statement ( Link to message ) reiterating the historical notifications with accounting information. It will issue a third statement on the business aspects disclosed in the Gotham City Research report. KPMG has been Grifols’ auditor for 32 years. In 2022, it issued an unqualified audit opinion with no emphasis of matter paragraphs.
Gotham Research publishes a destructive report on Grifols. Negative, although speculative in nature (-30%/50%). We tactically reduce our recommendation from Neutral to Sell.
09/01/2024
The report claims that Grifols manipulates debt and EBITDA figures, so that, according to this firm , the D/EBITDA leverage ratio would be 10x/13x vs. 6.7x published by Grifols in September, among other things.
Agrees to divest 20% (it has 26.6%) of its stake in Shanghai RAAS
02/01/2024
The buyer is Haier Group, which has agreed a price of 9.405 RMB per share (or around) 1.8 billion Euros. This represents a 15% premium over the average of the last 20 sessions. It will maintain the collaboration agreements with Shanghai RAAS. There is a lock-up that prevents Grifols from selling the 6.6% of its residual stake within a period of three years.
It could sell its business in China to China Resources
07/07/2023
According to Bloomberg, Grifols is looking for buyers in China to sell its 26% stake in the listed Shanghai RAAS, with the aim of reducing its debt, and cites China Resources as interested in acquiring this stake.
European Parliament postpones debate on plasma regulation
04/07/2023
The legal proposal was to be discussed at the end of June, but it is off the official agenda due to a legislative deadlock. The next dates could be July 18, August 29 or September.
Xembify begins marketing in Spain
06/27/2023
It is a 20% subcutaneous immunoglobulin for treating primary immunodeficiencies and certain secondary immunodeficiencies. It has been marketed in the USA since 2019 and Spain is the first European country where this product is marketed. It is approved in several European countries and in Australia. In addition to Spain, in 2023 its launch is planned in Wales (United Kingdom) and Australia and, in 2024, in France .
Possible sale of its stake in Shanghai RAAS Blood Products
06/15/2023
Grifols is “planning important changes that will involve modifications in the shareholding structure of SR. The possible corporate transaction is in the planning phase. If successful, Grifols will receive the sum of 1.5 billion dollars and will continue to be a significant shareholder of SR.”
The European Commission could authorize the sale of plasma in the EU
05/29/2023
On June 27, a text will be voted on that could allow plasma donors to be paid, seeking to reduce Europe's dependence on this material.
Grifols reaches a collaboration agreement with Selagine to develop a treatment for Dry Eye Syndrome
07/03/2023
Both companies will develop an eye drop based on immunoglobulin to combat this disease that affects more than 100 million people. Grifols will finance the development of the drug in exchange for exclusive worldwide marketing rights. They hope to obtain commercial authorization in 2029.
Grifols CEO resigns after just over three months in office
02/22/2023
Steven Mayer resigns as Executive Chairman and member of the Board for health and personal reasons. He is replaced by Thomas Glanzmann, a Grifols director since 2006 and Vice Chairman of the Board since January 2017. Virtually his entire professional career has been linked to the plasma industry, having held important positions at Baxter Bioscience, HemoCue and Immuno International, among others. The new Chairman will continue with the operational improvement plan implemented by his predecessor.
Grifols plans to cut costs by €400M from 2024 and reduce its workforce by 8%
02/16/2023
The savings are focused on (i) plasma procurement, including the closure of unprofitable collection centres, (ii) corporate structure and, (iii) efficiency improvements in the organisation. Of these savings, €100M could be achieved already in Q4 2023. It is estimated that the cost of reducing the workforce by 2,300 employees will be €140M, which will be accounted for in Q1 2023.
It could divest €2 billion worth of assets to reduce its debt
The source is the newspaper Cinco DÃas, which reports on a comment made by the new president in a conference call last month. The newspaper cites the stake in Shanghai RAAS and the diagnostic activity as candidates for sale.
Receives complaints in the US for non-compliance with data protection legislation
10/24/2022
The complaints come from about 54,000 blood donors in the U.S. The company says the lawsuits will have no impact on its results, and its lawyers recommend not making provisions since the potential risks are covered by insurance policies.
S&P cuts its debt rating, Moody's and Fitch leave it unchanged. The board issues a statement reaffirming its business plan .
09/26/2022
The updated ratings are: S&P B+ (previously BB-); Moody's B1; Fitch BB-. S&P highlights that the debt reduction process could evolve more slowly than expected amid difficult market conditions and maintains its Neutral outlook. Moody's and Fitch highlight the market positioning, the integration of the business model, the strength of demand, the expansion and diversification of plasma supplies, the increase in collections (+26% in 2022), the possibility of operational improvements and, among others, the generation of free cash flow that contributes to reducing debt. In a statement sent this morning ( link to the statement ), the board reaffirms its business plan. It also announces that it expects sales to grow c. +10% in 2H 2022 and that it will resume publishing results every three months.
Receives approval in Europe to market its Alzheimer's disease diagnostic tests
09/21/2022
Its 76%-owned subsidiary Araclon Biotech, which specialises in research into this disease, has received the European CE mark for its early diagnosis tests, which are aimed at research centres. These are the first Grifols tests to receive this seal.
Court allows tourists to sell their plasma in the US
09/20/2022
A judge in the District of Columbia on Friday struck down a U.S. border agency decision barring tourists from receiving compensation because their visas do not allow it.
Collaboration agreement with Canadian Blood Services
08/09/2022
It is a 15-year renewable agreement with this non-profit organization that operates an infrastructure in Canada that provides services to patients in the Canadian health system in the field of blood, plasma, stem cells, organs and tissues. It covers all provincial and territorial governments except Quebec. Grifols has committed to supply CBS with an amount of Immunoglobulin equivalent to 25% (2.4 million gr.) of the national consumption needs excluding Quebec, from a Canadian network of plasma collection centers that is being developed and will be manufactured in a new facility built by Grifols in Canada. Grifols plans to have the plasma collection network operational in July 2026 and the fractionation plant in 2026.
Grifols announces that it will not increase capital
04/07/2022
Grifols announces at its Investors Day that it will not increase capital.
Today is the annual day with investors and analysts
06/30/2022
The event with investors and analysts can be followed online today from 10:00 a.m. to 5:00 p.m. The share price fell sharply yesterday (-12.33%) due to rumours of a possible capital increase of 2 billion euros that has not been confirmed by the company and which, according to the press, could be directed to private equity funds . Firms such as KKR, CVC and Hellman & Friedman have been mentioned.
Rumours of a €2 billion capital increase
06/29/2022
According to a newspaper, the company could be negotiating with funds a capital increase of 2 billion euros (c. 18% of the current capitalization) with the aim of reducing the debt that is equivalent to 6.9x EBITDA.
Positive results in a phase III trial with a candidate to treat Fibrinogen deficiency
06/15/2022
Biotest has announced positive interim results from a Phase III trial for its candidate to treat Fibrinogen deficiency, a condition with a potential market value of between $400 million and $800 million.
Acquisition of German company Biotest is completed
04/26/2022
Following regulatory approvals, as announced on April 13, the purchase of Biotest shares from Tiancheng International has been completed and the takeover bid for the remaining shares of the company has been settled. Grifols owns 96.2% of Biotest's voting rights and 69.7% of its share capital .
Green light for the purchase of the German company Biotest
04/13/2022
The conditions (obtaining regulatory and anti-competition authorisations in Spain, Germany, Austria and Turkey) that are conditional on the takeover bid launched by Grifols for the acquisition of Biotest shares from Tiancheng Pharmaceutical have been met. Once the takeover bid is settled, Grifols will hold 89.9% of the ordinary shares and 1.1% of the preferred shares of Biotest.
96% of voting shares and 70% of capital participate in the takeover bid on Biotest
01/27/2022
Grifols' offer is for all of Biotest's capital, offering 43.00 euros per ordinary share and 37.00 euros per preferred share . The consideration is in cash and values Biotest at 2 billion euros. It has been accepted by 96.2% of the shares with voting rights, 43.24% of the preferred shares and 69.7% of the capital. By exceeding 95% of the voting shares, the acceptance period of the offer is extended to April 21 for these shares. The closing of the transaction is still pending receipt of the relevant regulatory authorizations. The main shareholder, Tiancheng Pharma, with 89.9% of Biotest's ordinary shares and 1.1% of the preferred shares, has agreed to the sale to Grifols.
We change our recommendation to Neutral (from Sell)
09/12/2021
On November 30th, when we heard the first news about Omicron, we announced a tactical change of recommendation to Sell. In our opinion, Grifols is the Spanish pharmaceutical company most exposed to a resurgence of COVID-19 and we expected that a worsening of sentiment would impact the Grifols share price. Since that day, the shares have fallen -8.2% vs +0.3% Ibex-35. Our new Target Price is €17.00/share (previously Under review from €20.00/share), a potential of +7.4%.
US authorizes Singapore sovereign wealth fund to invest in Biomat USA
11/17/2021
On June 30, 2021, Grifols announced an agreement by which the GIC fund acquires a minority stake ( percentage not specified ) in its subsidiary Biomat USA (100% owned by Grifols) for $1 billion through the issuance of new preferred shares without voting rights. The transaction has obtained the required regulatory authorizations in the US. Grifols will continue to control the management of Biomat and the supply of plasma. Grifols will use all funds from GIC's investment to repay debt.
Grifols: Joins the DJ Sustainability Index
11/16/2021
This is the first time that the company has been included in the Dow Jones Sustainability World Index, and it is the only European representative of its sector to enter the DJSI World in 2021. Grifols is also included in the sustainability stock market indices Dow Jones Sustainability Europe Index, FTSE4Good Global, FTSE4Good Europe, FTSE4Good Ibex, Euronext Vigeo Europe 120, Euronext Vigeo Eurozone 120 and Bloomberg Gender-Equality Index.
Grifols: Germany authorizes takeover bid for Biotest
10/26/2021
Grifols' offer is aimed at all of Biotest's capital. It offers €43.00 per ordinary share and €37.00 per preferred share, the consideration is in cash and values Biotest at €2 billion. The main shareholder is Tiancheng Pharma, which owns 89.9% of Biotest's ordinary shares and 1.1% of its preferred shares and has agreed to sell them to Grifols. Grifols has issued bonds for €2 billion to finance this acquisition. The initial acceptance period begins today and ends on January 4, 2022 at 24:00 CET.
Grifols announces promising analysis of data from a clinical trial for severe COVID-19 patients
10/14/2021
This is a program with Trimodulin, a plasma drug developed by Biotest, a German company in the process of being acquired by Grifols. According to the company, in a subgroup of 96 patients with COVID-19, Trimodulin significantly reduced the severity of the disease and mortality compared to patients treated with placebo.
Issues €2 billion in bonds to finance the acquisition of Biotest
06/10/2021
These are senior unsecured bonds for an amount equivalent to 2 billion euros. The issue is divided into two tranches: the first in euros for 1.4 billion euros and a coupon of 3.875% and the second in dollars equivalent to 600 million euros and a coupon of 4.750%. Both tranches have a 7-year maturity (October 2028). The funds from the issue will be used to finance the purchase of the German company Biotest.
Issues €2 billion in bonds to finance the acquisition of Biotest
09/28/2021
The company is starting to issue bonds to finance the upcoming acquisition of the German company Biotest. It is a 7-year senior bond issue in USD. The price could be announced today. Recently, S&P and Moody's cut their ratings for Grifols' debt by one notch to BB- with a negative outlook (S&P) and B1 with a negative outlook (Moody's). For its part, Fitch is starting coverage with a BB- rating and a stable outlook.
Moody's cuts rating to B1 with negative outlook from Baa3
09/24/2021
The cut lowers Grifols' debt rating by one notch and puts it on negative perspective. The agency justifies the cut by the recent announcement that the company will increase its debt by €2 billion to finance the upcoming acquisition of the German company Biotest and that, according to Moody's, would place the pro forma debt ratio as of June 2021 at 6.8x EBITDA. The negative rating is due to Moody's doubts about the ability to reduce the debt ratio below 6x EBITDA in the next 12-18 months.
S&P cuts rating to BB- with negative outlook from BB
09/23/2021
The cut means Grifols' debt rating is downgraded by one notch and put on negative perspective. The company plans to issue debt for 2 billion euros in the near future to finance the announced acquisition of the German company Biotest.
It will launch a takeover bid for the German company Biotest for c. 1.6 billion euros and will stop paying cash dividends. We cut P. Obj. to 20.00 euros from 24.25 euros/share.
09/17/2021
Grifols and Tiancheng Pharma, the main shareholder of the German company Biotest, have agreed that Grifols will acquire Biotest. Tiancheng Pharma owns 89.9% of Biotest's common shares and 1.1% of its preferred shares. The company has 26 plasma centers in Germany, the Czech Republic and Hungary, can process up to 1.5 million liters of plasma per year and plans to double its capacity in 2022. It also has a portfolio of 12 different products in hematology, clinical immunology and intensive care medicine, as well as several developments in the clinical phase. Grifols has agreed to launch a takeover bid for 100% of Biotest's capital once it receives the relevant authorizations, paying €43.00/share for each common share and €37.00/share for each preferred share and expects to close this acquisition at the end of Q2 2022.
The consideration is 1.6 billion euros (13% of Grifols' capitalisation), which will be paid in cash and represents a premium of 23% and 4% over yesterday's closing price for each type of share. The transaction values Biotest at an enterprise value of 2 billion euros. Grifols plans to finance the purchase of Biotest by issuing 2 billion euros of debt and announces that it will not pay cash dividends or make any acquisitions until it reduces its leverage to below 4x net debt/EBITDA.
Grifols sells a minority stake in its subsidiary Biomat USA to the GIC fund
06/30/2021
Singapore's sovereign wealth fund GIC has signed an agreement to acquire a minority stake (percentage not specified) in Grifols' Biomat USA subsidiary (100% owned by Grifols) for $1 billion through the issuance of new preferred shares without voting rights. Biomat has 296 plasma collection centers in the United States. Grifols will continue to control the management of Biomat and the supply of plasma. Grifols will use all funds from GIC's investment to repay debt.
Share buyback program ends
06/15/2021
In three months, the company has repurchased 0.93% of its capital with an investment of 125 million euros. During this period, the Series A shares have appreciated by +7.6% and the Preferred shares by +4.4%.
Rival's setback in cancelling a study boosts share price
06/14/2021
On Friday we learned that Vertex Pharma (-11% on Friday) has abandoned research into treating liver diseases. Grifols shares rose sharply after learning of its rival's setback, gaining +15% at the opening and closing +8%.
Investor Day: Grifols expects sales to rebound at the end of 2021 and a return to normality in 2022
04/06/2021
The main points discussed are: (i) Plasma supply and acceleration of the expansion plan. The main pillar is the acquisition of plasma collection centers and the establishment of strategic alliances in new markets (recent strategic agreements in China and Egypt, acquisition in Canada). Grifols will have 380 plasma centers in 2021, vs 171 in 2016 and expects to reach 520 in 2025. Plasma supply fell -15% in 2020, it expects to grow +10%/20% in 2021, recovery is noted in Germany and the US. These growths are supported by acquisitions. The expansion includes the increase in the number of plasma collection centers, increased capacity, operational efficiencies and optimization of operations. (ii) Innovation. It has various investigations underway to develop new drugs supported by plasma products. The main ongoing studies are aimed at degenerative diseases (dementia, Alzheimer's, Parkinson's), immunology, cirrhosis, infectious diseases, ENT and diagnostic techniques, among others. It expects that by 2030, revenues from these products will represent 20% of sales. (iii) Finance. 2021 is a year of transition, it expects to return to normality in 2022. The positive points are the increase in the plasma sales price (mid-single digit) and the contribution of new products. It expects an improvement in sales and results at the end of 2021 thanks to the recovery of plasma collections, improved cost efficiency (it maintains the 2020 target of €100M in annual cost reductions) and the contribution to results from the business in China. The negative points are the drop in plasma collections in 4Q20 and the increase in the cost per litre of plasma. It expects that debt will be reduced from the current NFD/EBITDA >5x caused by acquisitions to the target of 4x, but the deadline for achieving this financial discipline is not defined. It aims for divestments to improve operating margins. Grifols does not indicate results guidelines. It will publish its results on a half-yearly basis .
Today he will hold a meeting with investors. The share buyback plan is about to end
03/06/2021
This afternoon there is a virtual meeting with investors that starts at 3:00 p.m. The share buyback program for 1% of the capital that started on March 12 is about to end. Until May 28, the company has dedicated 110 million euros to acquire 0.8% of treasury stock . The objective is to invest a total of 125 million euros to acquire up to 1% of the capital. At the rate of purchases of c. 12 million euros shares/week, we estimate that the plan is about to end.
Unfavorable results in the development of its treatment for COVID-19 patients
05/04/2021
The US phase III trials of its immunoglobulin-based treatment for COVID patients have not met the primary objectives. The company is keeping other avenues of research open to treat COVID-19.
Acquires to repurchase 1% of its capital
12/03/2021
The company will repurchase approximately 15% of its capital (the amount is approximately €125m) on a prorated basis between the two classes of shares in circulation and within a period of three months from today. It plans to use these shares to pay for future acquisitions.
Acquires 56% of GigaGen that it did not control for $80M
09/03/2021
The company has acquired the 56% it did not control in gigaGen for $80M. This is an American biotechnology company specialized in the discovery and early development of recombinant biotherapeutic drugs. Its research focuses on the discovery of new biological treatments based on antibodies derived from millions of immune system cells obtained from donors.
It has several internal research projects, including a phase I development (in the US) of the world's first recombinant immunoglobulin and a portfolio of immuno-oncology therapies. In July 2017, Grifols acquired 44% of GigaGen. Half of the price has been paid at the time of closing and the remainder will be paid within one year.
Grifols buys 25 plasma collection centers in the US for $370M
02/03/2021
The seller is BPL Plasma and the acquired sites collect 1 million liters of plasma annually. The acquisition has received the relevant regulatory approvals.
Grifols begins phase III trials of its treatment against COVID-19
01/19/2021
The company is starting a clinical trial of a plasma protein with antibodies in Badalona. It is a phase III trial (the last before applying for marketing) where the safety and efficacy of the new drug containing immunoglobulin and antibodies from plasma donors who have overcome the disease will be evaluated. The clinical trial begins in February 2021 and the first results could be known in spring. Around 800 asymptomatic individuals, but diagnosed positive for SARS-CoV-2, will participate in this trial. A similar trial began in October in the USA.
Grifols completes the purchase of the 55% of Alkahest that it did not control for 146 million dollars
12/16/2020
In September, Grifols announced an agreement with Alkahest shareholders to acquire the 55% it did not control for a price of $146 million, debt-free. The transaction was expected to close in early 2021. $20 million was paid at the close of the transaction, with the remaining price to be paid on February 1, 2021. Grifols acquired 48% of Alkahest's capital in March 2015. Alkahest is a biopharmaceutical company dedicated to the research of neurodegenerative diseases and the treatment of age-related cognitive decline with plasma proteins.
Grifols acquires the remaining 49% of MedKeeper for $60.2 million
10/11/2020
In January 2018, Grifols acquired 51% of MedKeeper for $98M, a US company that develops and markets computer applications based on web and mobile platforms for hospital pharmacies.
Grifols: Investor Day, expectations are favorable
10/22/2020
The annual Investors' Day took place yesterday. The main points discussed were:
- Plasma collection. This market continues to grow at double-digit rates in response to the increasing demand for plasma therapies. During COVID-19 there is a reduction in plasma collections in Q2 and -15% is expected in 2020. On the positive side, the downward trend has been reversed and plasma collection volumes are recovering, in many areas exceeding pre-COVID-19 levels, and a recovery is expected in 2021. The company announced an inventory impairment of -€200M recorded in Q2 and partially offset against €100M of annual cost savings since 2020.
- Operations . Inventories and supply chain ensure product delivery during COVID-19. Grifols is accelerating investments in new donor centers to reach 435 in the US and Europe by 2025 from the current 312 centers. It plans to almost double plasma fractionation capacity to 28 M liters in 2026 from the current 15 M liters. Albumin purification capacity will increase to 26 M liters in 2025 (+60%). Investments planned for 2018-2022 are €1.4 billion for plasma collection, bioscience, diagnostics and hospitals. Our estimate is €1.56 billion. Innovation and improvement of operations are a constant.
- COVID-19 initiatives and other products . Clinical trials of its anti-SARS-CoV-2 hyperimmune globulin to treat COVID-19 patients continue. Other developments of plasma-derived products are ongoing: Alzheimer's disease, anti-aging or central nervous system. 30% of the growth is generated by recently introduced products such as Xembify, Fibrin Sealant or Tavlesse.
- International expansion. China is a strategically important market. The local partner is the listed company Shaghai RAAS, of which Grifols holds 26% of the capital. Grifols recently acquired a plasma fractionation plant, two purification plants and 11 plasma collection centres in the USA and Canada for $460 million from the South Korean group GC Pharma and other investors.
- Finance . The company has refinanced €6 billion of debt, cutting the cost to 2.8% (-80bp) and extending the term from 5 to 7 years. The objective is to reduce the debt below 4x EBITDA (current 4.7x and 4.4x excluding IFRS-16 debt). We estimate that this objective will be achieved in 2021e. Recent acquisitions (Shanghai RAAS, GC Pharma, Alkahest) support growth and generate value in the short term . The pay-out target remains unchanged at 40% ( dividend yield is 1.4%).
Grifols completes acquisition of US and Canadian assets from South Korean GC Pharma
02/10/2020
The company has closed this acquisition announced in July after meeting the conditions and obtaining regulatory approvals. It acquires a plasma fractionation plant, two purification plants and 11 plasma collection centers in the US and Canada for $460 million from the South Korean group GC Pharma and other investors. The plasma collection centers in the United States have a supply agreement with GC Pharma for a period of 24 months. The assets are acquired debt-free. With this purchase, Grifols will become the only commercial producer of plasma products in Canada, with the capacity to fractionate 1.5 million liters of plasma. The Plasma Collection Centers collected 350,000 liters of plasma in 2019.
Grifols: agreement to acquire the 52% of Alkahest that it did not control for 146 million dollars
07/09/2020
Grifols has reached an agreement with Alkahest shareholders to acquire the 55% it did not control for a price of 146 million dollars, free of debt. Closing of the transaction is subject to approval by the antitrust authorities and is expected to take place in early 2021. Grifols acquired 48% of Alkahest's capital in March 2015. Alkahest is a biopharmaceutical company dedicated to the research of neurodegenerative diseases and the treatment of age-related cognitive decline with plasma proteins.
Grifols delivers first orders of its anti-SARS-CoV-2 hyperimmune globulin for clinical trials
07/29/2020
The drug targets SARS-CoV-2 patients by providing passive immunity and boosting their immune system's ability to fight the disease. The globulin can be used for prevention and treatment against COVID-19. It will undergo clinical trials this summer to test its safety and efficacy.
Grifols: good results in trials of its treatment for patients with Alzheimer's disease
07/28/2020
The results of the AMBAR trial are favourable and indicate that patients treated with the albumin and immunoglobulin therapy developed by Grifols reduce the progression of the disease in patients.
Grifols acquires 10% of a blood component buying and selling platform in the US
07/24/2020
The platform is called Bloodbuy, the transaction price has not been disclosed.
Grifols acquires a plasma fractionation plant, two purification plants and 11 plasma collection centers
07/20/2020
Grifols has agreed to acquire, for $460 million, from South Korean group GC Pharma and other investors, a plasma fractionation plant and two purification plants in Montreal (Canada), as well as 11 plasma collection centers in the United States (these have a supply agreement with GC Pharma for a period of 24 months). The assets are acquired debt-free. The assets in Canada are in the process of obtaining the necessary licenses and regulatory authorizations. Grifols will become the only commercial producer of plasma products in Canada, with the capacity to fractionate 1.5 million liters of plasma. The Plasma Collection Centers collected 350,000 liters of plasma in 2019. The transaction is subject to regulatory approval, and Grifols estimates that it could take place before the end of fiscal year 2020.
Haemonetics plasmapheresis machine problems have no impact
03/07/2020
Yesterday, El Mundo published an article “The plasma machines of the 36,000 incidents” about failures in two models of plasmapheresis machines (blood extraction, plasma separation and cell re-insertion) manufactured by the company Haemonetics. Grifols is a user of these machines and also distributes them in Mexico, Chile and Argentina.
Grifols: Possible problems with Haemonetics blood processing machines
02/07/2020
Two models of plasma extraction and treatment machines from this manufacturer have caused problems, specifically the PC2S and the MCS+. They have been withdrawn in several countries and in the USA there are 36 cases of deaths. Grifols distributes the Haemonetics MCS+ Collection machines in Chile, Mexico, and Argentina.
Grifols begins manufacturing its immunoglobulin for the treatment of COVID-19 to conduct trials
12/06/2020
The company expects to have the first doses available in July to begin clinical trials. It is manufactured in Clayton, USA, and contains antibodies from the plasma of patients who have overcome the disease. Grifols has a collaboration agreement with the US government to develop this treatment and is seeking similar agreements in Europe.
Grifols makes provision for an inventory adjustment of -200 million euros
06/09/2020
The provision is due to a negative adjustment in the valuation of inventories, without specifying the type of inventories affected, and is charged against the results of 2020. It is estimated that this effect will be partially mitigated with a new operating expense containment plan that is estimated to have a positive effect of +€100 million on 2020 profits.
Grifols to launch its coronavirus diagnostic test in early May
04/22/2020
Manufacturing of the kits that will be available on the market in less than a month has begun . This is a highly sensitive, specific diagnostic test that allows the detection of the SARS-CoV-2 virus based on its Transcription-Mediated Amplification (TMA) technology.
According to the company, this technique is capable of detecting the virus's RNA with a sensitivity equivalent to or even greater than that of PCR-based techniques (polymerase chain reaction).
Signs alliance with Shanghai RAAS
03/30/2020
Both companies have signed the strategic alliance announced in 2019, through which Grifols takes 26% of the capital of the Chinese company, while the latter takes 45% of Grifols Diagnostics Solutions USA. The share exchange has not entailed additional disbursements for the companies.
US agrees to seek COVID-19 therapy
03/26/2020
The company and several health agencies in the US have agreed to collect plasma from patients recovering from COVID-19 to process it into a hyperimmune globulin and to investigate the feasibility of a treatment. In Spain, it is developing a clinical analysis based on the use of plasma and also a treatment for COVID-19 with plasma derivatives.
Grifols will enter Saudi Arabia with the help of a local partner
02/19/2020
Grifols has signed a non -binding agreement with the Saudi Public Investment Fund to jointly develop a network of plasma collection centers , a fractionation plant and a purification plant in Saudi Arabia.
Grifols shareholder acquires 50 plasma centers in the US
10/14/2019
Scranton Enterprises (which owns 8.67% of Grifols and includes several members of the Grifols family and company executives) has acquired the North American company BPL Plasma, which has 50 plasma collection centres in that country. The purchase is rumoured to cost around 600 million euros.