(Bloomberg) -- Spain’s billionaire Grifols family said it won’t support a new bid by a third-party to take its namesake drug-maker private, as Brookfield Asset Management Ltd. prepares to walk away from a plan to acquire the company over disagreements on valuation.
The New York-based money manager decided to end months of negotiations, which were disclosed publicly in July, after failing to reach an agreement with the board of Grifols SA on the price, according to the people familiar with the matter. Brookfield had lined up financing for the deal and prepared a turnaround plan for the business, according to the people, who cannot be named as the matter isn’t public.
The fund manager was looking to take the company private in partnership with the Grifols family, which owns about a third of the maker of medicine derived from blood-plasma. The decision by Brookfield comes just days after the Grifols board rejected an indicative price offer from the asset manager that valued the company at €6.45 billion ($6.8 billion).
“The family will not back another take private transaction,” a spokesperson for the Grifols clan said by phone. “We are very pleased with all the letters we’ve received from existing shareholders telling us the company is worth more and we will continue working so that the company’s value increases even more.”
Grifols shares fell as much as 13% in mid-morning trading in Madrid after the news was published by Bloomberg. Grifols’ bonds due in Oct. 2028 fell just under 5 cents on the euro in early morning trading, its biggest daily drop since January, to around 89 cents.
Grifols has faced a rough year since New York-based short seller Gotham City Research LLC issued a report in early January questioning its governance and accounting. The company has lost over a third of its market value since then, as the allegations and management mishaps eroded investor confidence.
“Brookfield was an opportunistic investor who was likely trying to take advantage of the delicate situation of the company and wanted to make a low offer for it,” Bestinver Securities analyst Patricia Cifuentes said in a note to clients. Brookfield is likely walking away over disagreements on valuation rather than any irregularities in the company’s books, she said.
Spokespeople for Brookfield and Grifols declined to comment.
In the aftermath of the short seller report, the company introduced management changes, appointing a new chief executive officer, Nacho Abia, and a new chief financial officer, Rahul Srinivasan, Bank of America’s former head of leveraged finance and capital markets for EMEA. In September, Grifols accelerated a plan to cut Chairman Thomas Glanzmann’s executive powers to mark a clear separation between the board and daily management.
Grifols has rejected Gotham’s accusations and sued the short seller in a New York court. Meanwhile, Spain’s National Court said on Nov. 19 that it would investigate Gotham for allegedly releasing “biased and deceptive” information about the firm to influence investors into selling the stock.
--With assistance from Bruce Douglas.
(Adds analyst comment in seventh paragraph.)
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