European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Debt Refinancing Achieved: Grifols issued €1.3 billion in bonds and extended its revolving credit facility, significantly improving liquidity to €1.7 billion proforma for Q3 2024 while addressing 2025 maturities.</li>
<li>Activist Shareholder Pressure: Hedge funds, including Flat Footed, continue to push for governance reforms, citing conflicts of interest and value destruction involving the Grifols family and board member Tomás Dagá.</li>
<li>Valuation Opportunity: Grifols trades at a high discount to peers, with upside potential based on its strong market position in plasma therapies, EBITDA recovery, and margin expansion post-COVID.</li>
</ul>


Debt Refinancing Achieved: Grifols issued €1.3 billion in bonds and extended its revolving credit facility, significantly improving liquidity to €1.7 billion proforma for Q3 2024 while addressing 2025 maturities.
Activist Shareholder Pressure: Hedge funds, including Flat Footed, continue to push for governance reforms, citing conflicts of interest and value destruction involving the Grifols family and board member Tomás Dagá.
Valuation Opportunity: Grifols trades at a high discount to peers, with upside potential based on its strong market position in plasma therapies, EBITDA recovery, and margin expansion post-COVID.


<ul>
<li>On November 27, Brookfield withdrew its €6.45 billion takeover bid for Grifols, citing valuation disagreements, shareholder resistance, and financing challenges after months of negotiation.</li>
<li>Grifols’ shareholders sought valuations near €14 per share, far above Brookfield’s offer, other challenges included regulatory hurdles requiring 75% approval and financing constraints due to rising interest rates.</li>
<li>The failed bid underscores Grifols’ focus on recovery, leveraging its plasma-derived therapies market position while addressing high leverage, cash flow concerns, and governance to restore investor confidence.</li>
</ul>


On November 27, Brookfield withdrew its €6.45 billion takeover bid for Grifols, citing valuation disagreements, shareholder resistance, and financing challenges after months of negotiation.
Grifols’ shareholders sought valuations near €14 per share, far above Brookfield’s offer, other challenges included regulatory hurdles requiring 75% approval and financing constraints due to rising interest rates.
The failed bid underscores Grifols’ focus on recovery, leveraging its plasma-derived therapies market position while addressing high leverage, cash flow concerns, and governance to restore investor confidence.


<ul>
<li>Rejected Offer: Grifols' independent committee rejected Brookfield's proposed valuation of €10.50 per Class A share €7.62 per Class B share, citing significant undervaluation of the company's long-term prospects.</li>
<li>Stakeholder Dynamics: Brookfield seeks a statutory amendment to differentiate Class A and B share prices, while opposition from Brandes (13.5% of Class B shares) and Mason complicates negotiations.</li>
<li>Financial Recovery: Grifols achieved 12% revenue growth in Q3 2024, reduced net debt to €8.1 billion, and targets a 4.5x leverage ratio by year-end, supporting improved financial stability.</li>
</ul>


Rejected Offer: Grifols' independent committee rejected Brookfield's proposed valuation of €10.50 per Class A share €7.62 per Class B share, citing significant undervaluation of the company's long-term prospects.
Stakeholder Dynamics: Brookfield seeks a statutory amendment to differentiate Class A and B share prices, while opposition from Brandes (13.5% of Class B shares) and Mason complicates negotiations.
Financial Recovery: Grifols achieved 12% revenue growth in Q3 2024, reduced net debt to €8.1 billion, and targets a 4.5x leverage ratio by year-end, supporting improved financial stability.


Lowball Non-Binding Indication from Brookfield

<ul>
<li>Since mid-October, share-price spreads have generally tightened across European liquid universe of ordinary and preferred shares (10 have tightened, 9 widened). Most spreads that were already tightening, kept doing so.</li>
<li>Most spreads that were already tightening, kept doing so. Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe.</li>
<li>Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.</li>
</ul>


Since mid-October, share-price spreads have generally tightened across European liquid universe of ordinary and preferred shares (10 have tightened, 9 widened). Most spreads that were already tightening, kept doing so.
Most spreads that were already tightening, kept doing so. Recommended trades long preferred / short ordinary shares: Atlas Copco, Grifols SA, Media-for-Europe.
Recommended trades long ordinary / short preferred shares: Carlsberg, Henkel, SSAB Svenska Stal.


Liquid Universe of European Ordinary and Preferred Shares: November‘24 Report

<ul>
<li>Brookfield has secured an €11 billion loan to refinance Grifols’ €9.2 billion net debt, paving the way for a potential takeover and significant control over Grifols’ operations.</li>
<li>Grifols' Q3 results reveal 12% revenue growth, strong free cash flow, and lower net debt, with 2024 targets reaffirmed for 7%+ revenue growth, €1.8 billion EBITDA, and 4.5x leverage.</li>
<li>The narrowing discount between Grifols’ A and B shares signals market optimism, reflecting confidence in a takeover. This would be my preferred strategy of playing this situation.</li>
</ul>


Brookfield has secured an €11 billion loan to refinance Grifols’ €9.2 billion net debt, paving the way for a potential takeover and significant control over Grifols’ operations.
Grifols' Q3 results reveal 12% revenue growth, strong free cash flow, and lower net debt, with 2024 targets reaffirmed for 7%+ revenue growth, €1.8 billion EBITDA, and 4.5x leverage.
The narrowing discount between Grifols’ A and B shares signals market optimism, reflecting confidence in a takeover. This would be my preferred strategy of playing this situation.


Spain

Grifols S.A. develops, manufactures, and markets plasma derivatives, IV Therapy, enteral nutrition, diagnostic systems, and medical materials.

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Grifols (GRF SQ)

Grifols: Activism and Debt Refinancing

Grifols strengthens liquidity through debt refinancing, faces activist shareholder pressure for governance reforms, and presents a valuation...

Jesus Rodriguez Aguilar

Brookfield's Bid for Grifols Collapses

Brookfield withdraws €6.45 billion takeover bid for Grifols due to valuation disagreements, shareholder resistance, and financing challenges.

Jesus Rodriguez Aguilar

Lowball Non-Binding Indication from Brookfield

Rejected Offer: Grifols' independent committee rejected Brookfield's proposed valuation of €10.50 per Class A share, citing significant...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares: November‘24 Report

Since mid-October, share-price spreads have generally tightened across European liquid universe of ordinary and preferred shares (10 have...

Jesus Rodriguez Aguilar

Brookfield Refinances Grifols' Debt

Brookfield has secured an €11 billion loan to refinance Grifols’ debt, paving the way for a potential takeover and significant control over...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Grifols: Activism and Debt Refinancing

​Grifols strengthens liquidity through debt refinancing, faces activist shareholder pressure for governance reforms, and presents a valuation...

Jesus Rodriguez Aguilar

Brookfield's Bid for Grifols Collapses

​Brookfield withdraws €6.45 billion takeover bid for Grifols due to valuation disagreements, shareholder resistance, and financing challenges.

Jesus Rodriguez Aguilar

Lowball Non-Binding Indication from Brookfield

Rejected Offer: Grifols' independent committee rejected Brookfield's proposed valuation of €10.50 per Class A share, citing significant...

Jesus Rodriguez Aguilar

Liquid Universe of European Ordinary and Preferred Shares: November‘24 Report

Since mid-October, share-price spreads have generally tightened across European liquid universe of ordinary and preferred shares (10 have...

Jesus Rodriguez Aguilar

Brookfield Refinances Grifols' Debt

Brookfield has secured an €11 billion loan to refinance Grifols’ debt, paving the way for a potential takeover and significant control over...

Jesus Rodriguez Aguilar

Grifols strengthens liquidity through debt refinancing, faces activist shareholder pressure for governance reforms, and presents a valuation...

Brookfield withdraws €6.45 billion takeover bid for Grifols due to valuation disagreements, shareholder resistance, and financing challenges.