Why Is Spanish Healthcare Grifols Stock Trading Lower On Friday?

On Wednesday, Grifols SA (NASDAQ: GRFS ) said it ended discussions with Brookfield Capital Partners (UK) Limited about a potential acquisition.

This decision follows the company’s November 19 statement rejecting Brookfield’s indicative offer to acquire Grifols for 6.45 billion euros ($6.81 billion) or 10.50 euros per Class A share.

Canadian fund Brookfield said it had dropped its plan to take over Spain’s Grifols due to a disagreement over the pharmaceutical company’s value, while Grifols said it concurred with the decision, Reuters noted.

The Board of Directors determined the proposal undervalued the company’s growth prospects and long-term potential. Grifols cited strong financial performance as a key factor in its decision.

For the first nine months of 2024, revenue grew 9.1% year-over-year at constant currency, supported by gains across all business units.

The company also reduced debt after selling a 20% stake in Shanghai RAAS for 1.6 billion euros, boosting its financial stability. Adjusted EBITDA for the past 12 months reached 1.7 billion euros.

The company emphasized that Brookfield had full access to its data and management during due diligence but concluded the offer did not reflect Grifols’ true value.

In August, Brookfield Asset Management said it sought 9.5 billion euros ($10.6 billion) in debt financing for a potential take-private deal for Grifols .

In a July regulatory filing, Grifols said that Brookfield Capita l has confirmed that it has engaged in preliminary discussions with Grifols’s key shareholders regarding a potential joint offer to delist the company’s shares from the Spanish stock exchanges and NASDAQ.

The judge of the National Court José Luis Calama has admitted a complaint from the Anti-Corruption Prosecutor’s Office to investigate Gotham City Research, General Industrial Partners, and several of its directors for allegedly releasing biased and misleading information to the financial market about the credibility of Grifols to induce its investors to sell the shares of this pharmaceutical company, which is listed on the Spanish stock exchange and is part of IBEX, causing a price drop that would generate a profit for the two companies denounced.

In January this year, Gotham City Research released a short report on Grifols, alleging that it manipulated its accounts to artificially lower its leverage .

The report alleges that Grifols included satellite companies’ earnings in its accounts but excluded their debts, distorting its leverage ratio.

Price Action: GRFS stock is down 12.9% at $7.03 during the premarket session at last check Friday.