Determining the real value of Grifols has been an insurmountable difference in the operation. Brookfield and the company have kept the pulse in recent months until the process finally ran aground. The Canadian fund remained firm in its position in the last week after relying on the figures reflected in the independent valuation report that Kroll, one of the main appraisers of companies in corporate operations, was preparing.
The 10.5 euros that were initially handled were insufficient for the company. The transaction committee first and the board of directors – without members of the Grifols family present due to potential conflict of interest – rejected this range considering that did not give the company its real value.
Brookfield responded bluntly to the National Securities Market Commission (CNMV) in a message that pointed to the independent directors of Grifols. The fund “has informed the Transaction Committee that under the current circumstances it is not in a position to continue with a potential offer for Grifols,” it said in a relevant fact.
Although last week there were doubts about the decision that the fund was going to make, finally the fact that they have definitively withdrawn from the bid has caused Grifols shares to plummet. In this sense, both share A, which is listed with voting rights, and share B, which is listed without it, have lost just over 9% in just one session.
With all this, this Wednesday’s fall in the stock market, despite its magnitude, still does not return Grifols prices to the area in which they were trading just before Brookfield’s interest in launching a delisting takeover bid was published together with the founding family, at the beginning of July, when it was trading at around 8 euros.
It is worth more than 16 euros
The differences between what shareholders could accept and what the North American fund was putting on the table were more than wide taking into account what analysts calculated each Grifols A share was worth. Without going any further, although in recent months there had been a deterioration in expert assessmentsthese were still more than 50% above the 10.5 euros of the probable offer.
Already at the first moment that this price was made public, people within the company reacted and the Transactions Committee positioned itself against recommending accepting the takeover bid to the Board and shareholders, concluding that it undervalued the company.
The average of the analysts who follow the company sets an average target price of 16.37 euros, 56% above 10.5 euros and 75% more than the price at which it is now listed on the stock market, after this Wednesday’s collapse, which is the largest since February 29.
“Brookfield was an opportunistic investor who wanted to take advantage of a delicate situation for the company and wanted to make a downward offer for it,” explains Bestinver Securities. “They are rejecting the operation because of the difference in valuations, not because of the company’s irregularities in recent months,” he clarifies.
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