Grifols Family, Brookfield Explore $5.5 Billion Takeover Bid for Catalan Firm | Companies

Grifols is facing a takeover bid to take it off the stock market. The founding family, which controls 30% of the company, is in talks with Canadian fund Brookfield about an agreement to offer 100% of the company, according to people involved in the process. The company declined to respond to multiple calls and messages from this newspaper. Its market value is about…

Grifols is facing a takeover bid to take it off the stock market. The founding family, which controls 30% of the company, is in talks with Canadian fund Brookfield about an agreement to offer 100% of the company, according to people involved in the process. The company declined to respond to multiple calls and messages from this newspaper. Its market value is about 5.5 billion euros.

The Grifols board met urgently this weekend to study the preliminary approach proposed by the Catalan family and the Canadian fund. The aim is to now have access to the books to make a final offer in the coming weeks. Lazard is the sole financial adviser to both sides of the deal. Yuria Menendez and Linklaters are legal advisers.

The move comes months after Grifols found itself at the center of a storm after bear fund Gotham City published a scathing report in January accusing the company of falsifying its accounts and valuing it at zero euros. That triggered a 40% price collapse this year and an investigation by the National Securities Market Commission (CNMV) that has issued a series of recommendations to clarify how to report its findings.

In this context, and in the face of attacks from a bearish investor, board sources indicate that the family was looking for a partner to develop a strategy that would be satisfactory to all shareholders. Brookfield is one of the largest funds in the world, with more than $250 billion in liquidity. In Spain, it owns renewable energy company X-Elio, which it bought from KKR, and clean energy company Saeta Yield, which it is putting up for sale. This would be its first operation in Spain outside the infrastructure and real estate sectors.

The Grifols family and various executives associated with the company control around 30% of the capital, which is distributed among various companies. After the Catalan saga, the next shareholder was the Capital fund, which owns 4.5%. BlackRock has another 4.3%, and the Europacific funds (3.2%) and Rokos Global (1.1%) are also in the shareholding.

A new stage for the company

In recent months, the company has ushered in a new era of management. The Grifols family has stepped aside, with directors Raymond and Victor Grifols leaving their executive roles as mere property. And it has appointed a new CEO, Nacho Abia from Japanese multinational Olympus, who took over on April 1. Thomas Glanzmann remains president, a position he assumed last year, though he has delegated some of his powers to the CEO.

At the same time, Grifols is working to refinance 2,900 million of the maturing debt of more than 10,000 million of the total debt it will face next year. At the end of June, the sale of 20% of the Chinese company Shanghai RAAS to Haier was finally closed, for which it received 1.6 billion euros. It also placed a $ 1,000 million private issue on the market, which was mainly subscribed by the Apollo fund.

The company’s idea is to use the 2,600 million from the placement and sale to pay off two listed bonds that expire next year, for a total of 2,000 million euros. It also has a liquidity line with banks worth another 900 million, which will have to be renegotiated in the coming months. To that end, last week it appointed a new CFO, Rahul Srinivasan, to replace Alfredo Arroyo, who has held the job for 17 years. Moody’s added fuel to the fire a few weeks ago by downgrading the company’s rating over concerns about its cash generation and its high liabilities.

With the takeover bid, the Catalan family is seeking to acquire the strength of a large fund like Brookfield to be able to support this new era of management. And also to eliminate the financial strain once and for all by issuing another 3 billion-plus maturing in 2027. This is not the first time that Grifols has explored the possibility of teaming up with venture capital. Already in 2022, when the company was still suffering from Covid-19 and the closure of plasma collection centers, they were looking for funds like KKR or CVC to raise capital with which to reduce the company’s debt and straighten its course. that they were ultimately rejected.

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