Grifols Falls 2% on the Ibex 35 After Moody’s Stops Covering It

Grifols, which has been the focus of the Gotham City Research hedge fund in recent months, has plummeted by more than 2% on the Ibex 35 at the start of trading on Monday, while its B-shares, listed on the Continuous Market, have plummeted by almost 5%, following the announcement last Friday by the credit rating agency Moody’s of its negative response to the Catalan firm.

Specifically, Moody’s announced on Friday, July 12 at the close of the market that it has withdrawn the ratings on Grifols because it believes that it has “insufficient or inadequate” information to support maintaining the ratings, in a context marked by the possible Public Offer for the Acquisition of shares (OPA) of exclusion that could be carried out jointly by the family shareholders and the Brookfield fund.

In this context, Grifols Class A shares opened the session at 9.6 euros, a 2% drop compared to Friday’s close , while Class B shares started the session with a 4.9% drop to 7.65 euros. At around 9:30 a.m., Class A shares were down 2.3%, while Class B shares were down 4.5%.

However, sources close to the Catalan company have explained to Europa Press that Moody’s is no longer covering them because their contract has been terminated, although they will continue to work with the agencies Standard & Poor’s (S&P) and Fitch. These sources have also alleged that Moody’s is withdrawing the ratings because, once the contract has been terminated, it will only be able to access the company’s publicly available information .

Grifols had a stable outlook for all ratings before Moody’s withdrawal

Going into the details of Moody’s statement, the agency has withdrawn the Catalan blood derivatives company’s corporate family rating (CFR) of B3 and its probability of default rating (PDR) of B3-PD.

Additionally, Grifols Escrow Issuer’s Caa2-backed senior unsecured ratings, B2-backed senior secured ratings, Grifols’ B2 term senior secured rating and Grifols World’s B2-backed bank credit facility senior secured ratings have been withdrawn. Prior to the withdrawal, the outlook was “stable” for all ratings .

Moody’s said in a statement that it had decided to withdraw the ratings because it believes it has “insufficient or inadequate” information to support maintaining the ratings.

Creation of the transaction committee

For its part, Grifols’ board of directors agreed last Friday to create a committee, called the transaction committee, to monitor the possible takeover bid that would be carried out jointly by family shareholders and the Brookfield fund.

In a statement sent to the National Securities Market Commission (CNMV), the Catalan company has stressed that the four directors related to Grifols’ family shareholders, namely Raimon Grífols Roura, Victor Grífols Deu, Albert Grífols Coma-Cros and Tomás Dagá Gelabert, abstained from participating in the meeting due to a potential conflict of interest.

Grifols has agreed to provide Brookfield with access to certain information under a confidentiality agreement as part of the work aimed at the possible presentation of a takeover bid for the shares of the company listed on the Ibex 35.

It should also be noted that the transaction committee is composed of Íñigo Sánchez-Asiaín Mardones as chairman , while Montserrat Muñoz Abellana and Anne Catherine Berner will act as members. The secretary and vice-secretary of the board of directors will also be part of the committee.

The meeting held on Friday also resulted in the appointment and hiring of the law firm Latham & Watkins LLP as legal advisors; the firm’s representative will also be part of the committee in his capacity as legal advisor. It was also agreed to delegate to the committee the work of hiring financial advisors in the context of the possible transaction.

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(Featured image by Chris Liverani via Unsplash)

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