Multinational homoderivative Grifols has been eyeing a stock market abyss this week following accusations that it hid its accounts from a Gotham City bearish fund. These are ten Keys to understanding the crisis It is carried out through one of the main listed companies in Spain.
1.- Plasma work
Grifols is one of them world’s largest blood products manufacturerThey are made of plasma, the liquid component of blood. The family business specializes in immunoglobulin treatments for disorders caused by immunodeficiencies and autoimmune diseases, or albumin used in surgery and emergency medicine, among others.
The company invoices 6 billion 064 million eurosWith end-2022 data, it employs more than 24,000 people, 5,000 of whom are in Catalonia. It has 15 production facilities, mostly in the USA and Spain.
2.- International expansion and debt increase
Founded as small family laboratory In 1909, Grifols opened its first plasma fractionation plant in Barcelona in 1958 and began international expansion 30 years later.
It became the first Spanish company to receive a license from the FDA (US health authority) in 1995, went public in 2006, and made its first major acquisition in 2011: American rival Talecris; listed on Nasdaq.
Then came the acquisitions: the diagnostics business NovartisEntry into China with the acquisition of 26% of Shanghai Raas and the acquisition of the German company Biotest, among others.
As a result, debts skyrocketed 9,540 million euros This represents 6.7x ebitda leverage in the third quarter of 2023, according to the latest available calculations.
3.- How Covid disrupted plans and put Grifols in trouble.
company played historical valuation peaks It had exceeded 34 euros per share on the stock exchange in February 2020, but the covid outbreak cut off the plasma supply, reducing its price.
Before lack of raw materials The company started to purchase the plasma supply centers it used to make plasma drugs, further increasing its debt.
4.- ERE and sales in China getting back on track
Blood product manufacturer requests to cut expenses and reduce debt early 2023 Employment regulation file (ERE), which foresees the dismissal of 2,200 people in the USA and 51 in Spain.
It announced the sales agreement at the end of last year. Haier Group It bought a 20 percent stake in China investment Shanghai Rass for about 1.6 billion euros and has already said this week that it will be used entirely to reduce leverage.
These moves eventually coincided with the transfer of all executive power to Switzerland. Thomas Glanzmann and the abandonment of the facade of Víctor Grífols Roura, the architect of Grifols’ expansion in recent years.
5.- And the Gotham report caused a stock market crash
Just as the company was starting to emerge from the crisis dragged into it by the pandemic, the Gotham City Research report was published: He accuses the pharmaceutical company of hiding his debt and making up his tricks knocked him out again.
Grifols shares listed on IBEX 35 reached 2019 down 42% At the opening of last Tuesday’s session, the stock has not lifted its head in the stock market since, despite a rally on Wednesday, when it announced that it was taking legal action against this bearish investor and his “false” accusations.
6.- Scranton and accounting tips
The bear fund accuses the multinational of artificially reducing its debt because it completely consolidated two companies in its accounts. Haema and BiotestThe Grifols purchased it in 2018 but later sold it to Scranton Enterprises, an investment vehicle affiliated with the Grífols family.
Gotham is also doubtful that Grifols can fully consolidate its U.S. subsidiary. Grifols Diagnostic Solutions, Shanghai Raass has controlled 45% of economic rights and 40% of political rights since 2020.
7.- Grifols’ reaction that did not convince the markets
In response to accusations from the New York-based fund, Grifols’ management leadership released several relevant facts and held a conference with international analysts and investors on Thursday, where they insisted the information was confidential. “absolutely wrong”In addition to being “wrong” and driven by a “speculative” interest, he defended it.
Descriptions They could not fully convince the financial markets Judging by how they react.
Chairman and CEO Thomas Glanzmann argued that the consolidation of the companies was done in accordance with international accounting standards and denied that Scranton was a ‘family office’ (family wealth management offices) because it was a company he brought together. 22 investorsOnly three of those who own 20% of the capital are family members.
8.- The decisive role of the CNMV
National Securities Market Commission (CNMV) requested more information from the company It’s about Gotham’s reported operations, something the company has said it will do “as soon as possible” within the given ten-day period since meeting with him on Wednesday.
The role of the stock market auditor is very important because if it raises questions to any extent accounting of multinational company, The crisis in the markets will get worse.
9.- A strategic company for the USA
Grifols’ stock price crisis takes on special significance if we take into account that the US Government considers the facilities of the Spanish company to be strategic, as Wikileaks revealed in 2010. Especially in the documents leaked at that time, the Grifols factory Parets del Vallès (Barcelona).
Catalan factory in these newspapers three strategic assets For the American giant in Spain, next to the gas pipeline connecting the Peninsula with Algeria and the Strait of Gibraltar.
10.- Future unknowns
The company now has a difficult road ahead of it to continue clarifying unknowns such as the extent to which it can navigate the stock market crisis, whether it can do this in weeks or months, whether this situation can last for months. will be able to adapt to the reduction. debt ratio Set for 2024 (will be under four times EBIT).
One of the most important episodes will take place at the end of next February, when multinational companies plan to present this issue. Closing 2023 accounts, A situation that Grifols has already guaranteed will be positive.