Troubled Spanish pharma company Grifols says it may go private for $6 billion

By Barbara Kollmeyer

Shares of Grifols have lost 41% this year after a short seller raised questions over financing

Shares of Grifols climbed on Monday, following news the Spanish blood plasma pharmaceutical company may go private in a deal with Canadian investment managing group Brookfield Capital Partners.

"According to the information provided to the Board of Directors, Brookfield and the Family Shareholders have reached an agreement to evaluate a possible joint takeover bid to acquire all the share capital of Grifols," the company said, according to a statement provided by Spain's regulator.

Spanish daily Cinco Dias reported on Sunday that Grifols family - the company is roughly 30% controlled by insiders according to Factset - and Brookfield were mulling a joint takeover bid worth around 5.5 billion euros ($5.95 billion) that could come within weeks.

Shares (ES:GRF) were halted briefly before trading began mid-morning, but jumped 15% when trading resumed. That would represent the best one-day gain since early March if it holds.

Down 41% so far this year, the stock has struggled since hedge fund Gotham City Research raised questions over the Madrid-listed group's financial reporting in January.

The short seller accused Grifols of manipulating its debt-to-earnings figures by consolidating earnings of units it doesn't control, meaning leverage was likely double reported levels, and said shares were "uninvestible." The Spanish company rejected Gotham City's research as "false information and speculations."

Grifols appointed a new CEO, Nacho Abia, in April and last week named Rahul Srinivasan as new chief financial officer and added two independent directors to its board.

U.S.-listed Brookfield Asset Management (BAM) shares have dropped 4% this year.

Brookfield declined to comment further when contacted by MarketWatch.

-Barbara Kollmeyer

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07-08-24 0709ET

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