Grifols Faces a Turbulent Chapter as Share Declines and Probes Open
Grifols, the Catalan pharmaceutical group focused on plasma-derived therapies, saw its stock slump by nearly 35 percent to 7.584 euros on a single trading day after revelations that a BPC subsidiary paid a 266 million euro dividend to Scranton, the family-owned vehicle holding about 8 percent of Grifols. The company asserts that the payout was funded by the repayment of a debt that did not drain cash, based on figures filed with the national market watchdog.
In its half-year financial report filed with the regulator, Grifols notes that last year BPC Plasma distributed a dividend with no immediate cash outflow, offsetting other non-current financial assets. The payment corresponds to results from the previous four years, totaling 266.4 million euros to Scranton Plasma B.V. The distribution affected reserves of non-controlling interests within the group.
Grappling with questions about related-party transactions, Grifols is under scrutiny for the tunnel-like dealings between the company and the presumed family vehicle behind Scranton. A notorious shortcoming highlighted in a January report by Gotham City, a London-based investment fund, accused the firm of manipulating its accounts. The fund’s assessment added fuel to a larger debate about governance and accounting practices at the group.
Moreover, Grifols reports a financial asset labeled as linked to related parties, totaling 101.2 million euros at year-end 2023, distributed between Scranton and the plasma collection entities BPC and Haema. The company describes this as a cash-pooling arrangement designed to optimize treasury management between the holding company and the plasma-related subsidiaries. Scranton owns BPC and Haema, while Grifols consolidates their results due to management control and an option to acquire.
The accounts have not been audited by KPMG, and the signature of a board member, James Costos, former US ambassador to Spain, was not present at the meeting that reviewed them. Grifols assures that the audit by KPMG is expected to be completed with no qualifications before a stated deadline.
Last year, Grifols posted a net profit of 59 million euros for 2023, reflecting a 72 percent drop from 2022. The group, a major player in the hemoderivatives market, has faced intense stock market pressure following Gotham City’s revelations about alleged accounting practices intended to mask debt weight. Excluding restructuring-related expenses, the company suggests that net profit would have reached 206 million euros, offering a counterpoint to the downturn cited in official reports.
Legal Battleground
On January 26, Grifols initiated a lawsuit in the United States against Gotham City, seeking damages and asserting that the fund profited from a short position by distributing a misleading report about the group’s accounting, communications, and finances.
Meanwhile, minority Grifols shareholders in Spain consider pursuing damages against the company’s directors under corporate governance laws, arguing that relatives and executives may have harmed investors. The aim is to use capital company statutes to launch a corporate social responsibility action. As reported publicly, American law firms may also pursue claims against the Catalan company alleging the dissemination of false information to the market.
Grifols Slips So Far in 2024
So far this year, Grifols has fallen about half a percent, trailing as one of the laggards in its major index. The company carries a market value around 3.232 billion euros and faces a stake from two short-term investors, WorldQuant and Qube Research & Technologies.
The declines come despite efforts to clarify Gotham’s allegations through three communications to the market regulator, an investor briefing led by the chairman, and leadership changes that include a new chief executive and the departure of senior executives from the Grifols family. The company emphasizes its commitment to transparent disclosures and responsible governance moving forward.