Grifols will use the funds from GIC to cut its debt; meanwhile other payment commitments have been generated

Grifols

Renta 4 | Grifols (GRF) and GIC have obtained the relevant regulatory authorisations to allow The Sovereign Wealth Fund of Singapore to go ahead with its investment to buy 23.8% of Biomat for 990 million dollars.

Grifols will, of course, still maintain operating control of the company, as well as access to the recovered plasma in the over 300 plasma donation centres Biomat has in the United States.

The funds obtained by Grifols from the investment will be used to reduce debt, as part of the company’s commitment to doing that.

Valuation

We have never shared the rational behind this transaction. The funds from the sale of the stake in Biomat will help cut the debt on Grifols’ balance sheet. However, in the meantime, other payment comittments have been taken on. (As Grifols explained in its H1 2021 results’ report, the 19 shares of Biomat bought by GIC have a preferential right to an annual dividend of 4.1 million dollars/share, with an annual yield of 7.8%. They also offer the right to resell one share per year at their original acquisition price). So these other payment commitments will in fact be much more costly for the company than the debt they are replacing.