In 2024, Grifols Fought a Thousand Battles Only to Get Back to Square One

In its eighty-year history, Grifols must have had several memorable years. But without a doubt, 2024 will be another one to remember, although perhaps not so positively. The company has gone through enormous ups and downs, ranging from a change in leadership, accusations of a bearish fund, to a possible delisting from the stock market.

The Catalan pharmaceutical company started 2024 with a hard blow. In January, the hedge fund Gotham City Research accused Grifols of consolidating the results of companies over which it supposedly had no voting power in order to disguise its leverage. Faced with the accusations, the blood derivatives company initiated legal proceedings that continue to date, waiting for the allegations that Grifols made in the lawsuit in the United States against Gotham to be brought to light.

Following in chronological order the events that Grifols went through this year, a few weeks after the journey with Gotham , the Grifols family announced the cessation of their executive responsibilities in the company . The decision involved Víctor and Raimon Grífols, who until then were director of operations and corporate, respectively.

Following their departure, both Grífols became directors (Víctor) and vice-presidents (Raimon). The time then came to take over the family business , bringing in Nacho Abia, former director of the Japanese company Olympus, who was appointed CEO of Grifols under the presidency of Thomas Glanzmann, executive president.

Grifols hired Nacho Abia as its new CEO this year

Since the departure of the Grífols family from operational positions, there has been a series of resignations of various members of the pharmaceutical company’s board. One of them was Albert Grífols Coma-Cros, who went from executive director to proprietary director.

On April 18th, Tomás Dagá, close to the Grífols, resigned from his position as non-member secretary of the auditing commission. He was followed by James Costos, former US ambassador to Spain and Andorra, citing personal commitments.

But it was not all bad news. On February 13th, the technology giant Haier, through its subsidiary Qingdao Medical Haier Medical Technology, notified the National Commission of Markets and Competition (CNMC) of the purchase from Grifols of 20% of its stake in Shanghai Raas Blood (Sraas). At the end of January, it had already announced that it was still interested in the operation, which it completed on June 18. One of Gotham’s predictions was, precisely, that this sale would not take place.

There was also a mixed bag from the National Securities Market Commission (CNMV), which was supposed to study the veracity of the accusations from the short-term fund. The regulator announced that it had found “significant deficiencies” in Grifols’ annual accounts, in the detail and accuracy of the breakdowns and explanatory notes that support the figures, but at the same time maintained that it had not identified “significant errors” in Grifols’ annual accounts, so it was not necessary to reformulate them.

The company began to consider a possible takeover bid in the summer

Summer brought some important news for Grifols. The family, a few months after announcing its resignation from executive positions, was in talks with the Canadian fund Brookfield to evaluate the possibility of launching a takeover bid (OPA) .

The company’s reactions were not long in coming. Independent directors Claire Giraut and Carina Szpilka Lázaro left their posts. To deal with the setback, Grifols appointed Montserrat Muñoz, former Danone executive, independent director and president of the Audit and Compliance Committee of Uriach, as independent director and coordinator of the board.

Anne-Catherine Berner, a former Member of the Finnish Parliament and Minister of Transport and Communications from 2015 to 2019, was appointed as a new member of the Audit Committee and Chair of the Appointments and Remuneration Committee, and oncologist Enriqueta Felip was appointed as a member of the company’s Appointments and Remuneration Committee.

The takeover bid process took several months, until finally, last November, Grifols rejected Brookfield’s offer of 10.5 euros per share for A shares, while B shares, without voting rights, were offered at 7.62 euros. The pharmaceutical company claimed that the Canadian fund’s offer “undervalued” Grifols.

Grifols lost up to 1.3 billion euros on the stock market after rejecting Brookfield’s offer

While the takeover bid was still up in the air, the National Court announced an investigation into Gotham City for releasing biased and misleading information about Grifols’ credibility to the financial market and thus inciting the sale of shares.

Previously, the CNMV had considered Gotham’s manipulation to be more serious than Grifols’ inaccuracies in its accounts . It referred to inaccuracies in the explanations and breakdowns that supported or explained how those numbers had been calculated. “The figure was correct, but the company did not explain well enough why it had followed that method to arrive at that figure.”

Following the rejection of Brookfield’s offer, Abia stated that Grifols was returning to business as usual with the focus on the business and stressed that “there will not be a big sale.”

Of course, all the corporate ups and downs of Grifols caused the company’s shares to have different performances. One of the biggest ones was after learning of the rejection of Brookfield and leaving 1.3 billion on the stock market .

Throughout 2024, Grifols went to the market three times to refinance its debt

With the takeover bid out of the way, the Catalan blood derivatives company has returned to focusing on one of its main objectives: refinancing its debt. Grifols has a bank credit line that expires in 2025 and that it must refinance for 1.4 billion euros.

Of the total debt, $1 billion is a revolving loan. Last June, Grifols had arranged $625 million of this financing from the 20% sale of Shanghai Raas to repay $300 million. This loan matures in November 2025 .

In a year with too much turbulence , Grifols went to the market three times to refinance the maturity of 2.8 billion euros due in 2025 and to be able to defer payments.

With the latest refinancing carried out this December, Grifols has gained time until 2030. In addition, the company has three other outstanding issues, from 2019 and 2021 for 2.77 billion euros. The most immediate maturity is to be paid in 2027 for a bond of 770 million with interest of 2.25%. However, the interest to be paid on the new bonds placed will increase the debt by 180%.

In recent weeks, Grifols has reorganized its board of directors , filling the two vacancies it had to fill with the appointment of Pascal Ravery and Paul S. Herendeen. The Catalan pharmaceutical company thus followed the recommendations of Mason Capital, which insisted on the incorporation of Herendeen to its management body.

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(Featured image by Adeolu Eletu via Unsplash)

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First published in PlantaDoce. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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