Grifols shares rose 10% amid rumours of a possible bid from Private Equity firms

GrifolsGrifols reclassifies balance sheet, cuts capital by 830 M€

Renta 4 | According to website Betaville, there would be some Private Equity groups interested in acquiring the Spanish pharmaceutical firm. On Wednesday afternoon, Class A shares in Grifols (GRF) but especially those of Class B, plus the ADRs rose sharply (up to 10%). That said, the ADR ended up losing almost half of the gains. Behind the surge in the share price was the fact that Betaville suggested that private capital groups would be studying the possibility of launching a bid for the company.

The website specifically mentioned that a US group and another from the UK are the interested parties. And they could form a consortium to launch a joint bid. However, they warned that it was not clear whether the private equity firms had contacted Grifols with an offer. So they called their information an “uncooked alert”.

Valuation 

In light of the company’s current valuation, and the prices which are usually paid for assets in this type of negotiations, it is not suprising that there are groups interested in Grifols. However, given its current debt level, and the fact that its voting shares (Class A) are controlled by a core shareholder nucleus (35% of all the company, but we estimate this is over 50% of the Class A shares), it would not be easy to take over the company without the blessing of the Grifols family. That said, both situations may be compatible, which could lead to some sort of agreement.

We reiterate our Overweight stance, with a Target Price of 26,5 euros/share.