More pressure around the possible takeover of the Canadian fund Brookfield by Grifols together with the founding family. Mason Capital Management LLCa US fund that holds 2.1% of the pharmaceutical firm’s class A shares, has sent a letter to the board of directors of Grifolsin which he has criticized the company’s management, its governance and, above all, has pointed out that the possible corporate transaction that is being negotiated right now undervalues the Spanish listed company.
In the letter, Mason, a fund that was founded in July 2000 by Ken Garschina and Mike Martinohighlights what he believes are numerous corporate governance failures that have led to the fall in Grifols’ share price and have pushed the company to explore an agreement with Brookfield on terms that “dramatically undervalue the company.” explains the investment firm in a statement. That’s why Mason is calling on the board to immediately implement a series of measures to address his conflicts of interest.improve oversight and ultimately unlock value for shareholders.
Mason Capital rates the possible transaction with Brookfield as “the result of poor corporate governance by a contentious Board of Directors with a history of poor capital allocation”. In this sense, the fund based in New York (United States) points out that each large transaction – of more than 1,000 million euros – since 2014 has destroyed value for shareholders. “The purchases were financed entirely by debt, resulting in approximately €4.5 billion of additional liabilities on the balance sheetwhile they only added 136 million euros of EBITDA,” he explains.
Regarding the management of the company, it states that the family and its linked directors currently have de facto control of the Board of Directors, but only with approximately 31% of the Class A shares with voting rights, affirms the substance in his letter. The remaining 69% of the capital, Mason adds, can permanently solve the corporate governance failures at Grifols.
It is not the first letter that Mason Capital sends to the Grifols board. In August, Mason supported himself with Flat Footed and Sachem Head Capital Managementtwo other activist funds, to send a letter and request their entry into the governing body. All of them account for 7.7% of the company’s share capital and requested that Paul Herendeena pharmaceutical industry executive, joined the board to represent his interests.
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