Brookfield makes a $6.8 billion bid to buy Grifols

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Brookfield Asset Management Ltd is walking away from plans to acquire Grifols SA, ending months of talks to take over the Spanish blood-plasma company.

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The New York-based money manager said on Wednesday it decided not to pursue a deal, confirming a Bloomberg report, after the Grifols board rejected an indicative offer that valued the company at €6.45 billion (US$6.8 billion). Brookfield said in a regulatory filing that the decision also “followed extensive due diligence.”

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Brookfield, which was announced publicly in July, was looking to take the company private in partnership with the Grifols family, which owns about a third of the manufacturer of drugs for diseases such as hepatitis and hemophilia. The Spanish company’s founding family has said it will not back a new bid to take the eponymous drug maker private.

“The family will not make another private transaction,” a spokesman for the Grifols clan said by phone, noting that it had received a letter from shareholders saying the company was undervalued. “We will continue to work to increase the value of the company.”

Grifols shares fell as much as 14 percent after this news was published by Bloomberg, the largest intra-day decline since February 29. They traded eight percent lower at 3 pm in Madrid. The bond due in October 2028 recorded its steepest daily decline since January in early morning trade to around 89 cents.

Grifols has faced a rough year since New York-based short seller Gotham City Research LLC issued a report in early January questioning governance and accounting. The company has lost more than a third of its market value since then, as allegations and management mishaps eroded investor confidence.

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“Brookfield was an opportunistic investor who likely tried to take advantage of the soft situation of the company and wanted to make a low offer,” Bestinver Securities analyst Patricia Cifuentes said in a note to clients. Brookfield is likely to walk away through disagreements in the valuation rather than any irregularities in the company’s books, she said.

A spokeswoman for Grifols declined to comment.

For decades, Grifols has been riding the demand for blood plasma. But after a chaotic period during the pandemic, blood collections are dwindling and a heavy debt burden due to corporate acquisitions is in focus. At the end of the third quarter, the company’s debt – including rent – stood at €9.2 billion.

Although the influence of Grifols has gradually increased, questions remain about the company’s ability to generate cash, especially after the sudden release of less than €5 million in free cash flow for 2024, citing extraordinary items and surprising analysts.

Short seller Gotham accused Grifols in the report of shuffling assets with family holding companies and manipulating debt and profit numbers.

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Grifols denied the allegations and sued the short sellers in New York court. Meanwhile, the Spanish National Court said on November 19 that it will investigate Gotham for allegedly publishing “biased and false” information about the firm to influence investors to sell shares.

After a short sales report, the company introduced management changes, appointing a new chief executive, Nacho Abia, and a new chief financial officer, Rahul Srinivasan, Bank of America’s former head of finance and capital markets for EMEA. In September, Grifols stepped up plans to cut chairman Thomas Glanzmann’s executive powers to signal a clear separation between the board and day-to-day management.

Bloomberg.com

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