Bankinter: The fund has sent a letter to the Board asking for an extension to be able to continue analysing this possible offer.
Opinion of the analysis team: Negative news. On 8 July we learned that Brookfield was analysing a takeover bid for Grifols. Almost three months have passed since then and, possibly, a deadline agreed between both parties will expire, which justifies the fund’s request for an extension. The latest news suggests that the takeover bid is becoming more expensive and Brookfield is seeking financing in view of: (i) the statutory requirement to match the bid price of the two classes of shares (they are listed at different prices and the economic and political rights are different between the classes); (ii) the search for financing from sovereign wealth funds in the Middle East; (iii) Brookfield’s refusal to obtain a majority shareholding; (iv) the demand of several funds to be represented on the board and to pay a high premium in the takeover bid.
The potential takeover bid is complicated, the process is delayed and this delay increases the uncertainty as to whether the fund will make a bid for Grifols. Brookfield’s refusal to launch a takeover bid would have a negative impact on Grifols’ share price. We reiterate our Sell recommendation.
