Brookfield teams up with Spain’s Grifols family to explore a bid for Spanish drugmaker

The private equity arm of Brookfield Asset Management Ltd. has teamed up with the family behind Spanish drugmaker Grifols, which has been expanding into Canada, to put together a possible bid to take the pharmaceutical company private, the two companies said in separate statements.

Grifols said on Monday that members of its founding family, who own nearly 30 per cent of the company’s shares, and Brookfield had asked for company information to evaluate a potential joint bid that would delist the company from Spanish stock exchanges and the Nasdaq exchange. The Grifols board of directors held an “extraordinary meeting” to consider the request on Sunday, the company said. Brookfield confirmed in its own statement “that it has held exploratory discussions” with shareholders about a making an offer.

Spanish business newspaper Cinco Dias reported over the weekend that the suitors, who are being advised by investment bank Lazard, could make a final offer in the coming weeks, and that the deal could be worth roughly €5.5-billion (C$8.1-billion).

Grifols is a Spanish multinational pharmaceutical company that specializes in producing blood plasma-based products, which are part of life-saving medicines used to treat people with compromised immune systems from cancer treatment, autoimmune disorders or other reasons. Grifols has brought its commercial blood plasma collection business – which pays plasma donors – into Canada through a controversial partnership with Canadian Blood Services, a national charity that typically relies on voluntary donors.

Paying for plasma is banned in some Canadian provinces, including Ontario and B.C., but Grifols has been able to sidestep those restrictions in Ontario by acting as an “agent” of Canadian Blood Services. The Spanish company’s entry into Canada could be a proving ground for an international expansion plan that involves striking public-private partnerships, such as one launched in Egypt in 2020. That model sets Grifols apart from its main rivals, Australia’s CSL and Japan’s Takeda.

Of late, Grifols’s market value has plunged by several billion euros after it was targeted by a short-seller, Gotham City Research, which accused the company of overstating its earnings and understating its debt. Grifols has denied wrongdoing but has made governance changes, appointed a new chief financial officer and was required by regulators to revise its reporting on its leverage.

Aside from issues with its depressed share price, Grifols has a strong position in the health care market as one of only three major global companies specializing in plasma, after years of rising demand from Canada and other countries for immunoglobulin, which is used to treat sick patients. Grifols is a ripe target for a take-private offer from a private equity firm such as Brookfield due to high demand, a highly concentrated industry and a rocky period in public markets that has driven down the company’s value.

Brookfield said in its statement that it has entered into an exclusivity agreement with some Grifols shareholders “to further evaluate the potential transaction,” but said there is no guarantee they will make an offer for to buy the company’s shares.

Grifols said it does not know if a transaction will occur, or what the terms of a deal could be.

Shares in Grifols were up 20 per cent to US$8.47 by late morning on the Nasdaq exchange.

With a report from Reuters News.