A year of turmoil in Grifols

BarcelonaGrifols’ successful career has accustomed its employees and shareholders to a routine of good news that is out of the ordinary. In recent months this dynamic has been twisted. For the first time in a long time, the Catalan company experienced a complicated year in 2021. The closure of the plasma collection centers due to the pandemic affected Grifols’ ability to access the raw material with which he makes his medicines. This led to much lower results than the Catalan company usually has, with profits of 182 million which were 70% lower than the previous year. In fact, in the last five years it had never earned so little (the second lowest record is 597 million in 2018).

During the last decade of unstoppable growth, often through the purchase of other companies, the main problem that Grifols had had was its level of indebtedness, but during the last year its profit and loss account has also suffered and this was reflected in the stock price, which fell by 30%.

Despite this dynamic, in 2021 Grifols announced the purchase of the German company Biotest to strengthen its drug portfolio. The operation, of 1.1 billion, is one of the most ambitious of Grifols in recent times, although it is far from the purchases that made real leaps in its volume such as Talecris, in 2011, or the entry into the Chinese Shanghai RAAS, in 2018. The purchase of Biotest placed the debt of the Catalan company at 5.4 times its ebitda (earnings before interest, taxes and depreciation), when before it was 4.9 times . The debt at the end of the year was 5,828 million euros in a company that had a turnover of 4,933 million euros throughout the year.

If the results were a bad year and the debt increased, the company also did not have good news in terms of employment. In 2020 the company closed with 23,655 employees. But by the end of 2021, the blood product company had 3% less. This small reduction in staff is the second in recent years in the company, which in 2019 had reached over 24,000 employees.

Actions, far from 2020 levels

It is in this context that the sound of a possible takeover of Grifols has sounded in the sector. It was first published by the Financial Information Blog Betaville at the end of last month. The publication stated that two funds, one from the United States and one from the United Kingdom, would be considering submitting the purchase offer jointly. On the 31st, the investment bank Renta 4 echoed this and in five days the shares rose by 9.5%. Official company sources declined to comment on the matter, citing “rumors or speculation”. And the truth is that in recent days the action of the Catalan multinational has lost momentum in the first days of April and that now the securities are worth 6% less than a month ago, which could show that the market does not this supposed takeover is believed.

The fact is that Grifols is not going through its best trading moment. Just before the pandemic, Grifols had traded above 34 euros, in what was his historical record. But after a bad year 2021, right now the shares are around 15 euros, which would make this acquisition attempt possible. The stock market value of the company now exceeds 9 billion euros, which seems acceptable when two years ago it had exceeded 20 billion.

However, other voices rule out a takeover bid because the Grífols family will maintain control of the company in any case. This responds to the fact that the Catalan company has two types of shares: those of class A and those of class B. The first give the right to vote and are basically in the hands of the hard core shareholder of the company, which make up Scranton, Rodellar , Ponder Trade and Deria, among others, and which brings together some of the most prominent members of the founding family. A knowledgeable voice of the situation is clear. “There is nothing, there is no takeover and without the support or consent of the central group it cannot be done because the hard core controls more than 40% of the capital,” he explains.