The headquarters of Grifols.David Zorrakino (Europa Press / Getty Images)
Gotham City returns to the fight against Grifols. The bearish fund has published a document asking a series of seven questions to the Catalan blood products company, questioning its ties to Scranton Enterprises, which is linked to and owns the company's founding family. of 8.6%. Specifically, it focuses on two items in Grifols' accounts worth around 500 million, which it believes obscure further links between the two companies. Shares are up just over 2% on the stock market despite falling more than 7% earlier in the day.
More than a month ago, on January 9th, Gotham City published a scathing report against Grifols, giving its shares a value of zero euros. The American fund that triggered the bankruptcy of Gowex in Spain accused the company of manipulating its accounts, highlighting its ties with Scranton and in particular the fact that both Grifols and its shareholder had consolidated their accounts, including the companies BPC and Haema. which bought the former in 2021 and sold it to the latter in the same year.
Gotham City addresses this question. Ask Grifols leadership why they are doing this accounting treatment, which the company already decided in a meeting with investors after the release of the first Gotham report and in a relevant fact. In his opinion, he can consolidate these two companies into both Grifols and Scranton since the former retains a right to purchase these companies and this is permitted by accounting rules. Gotham also asks Grifols whether it has informed the owners of its more than 9 billion in debt about the use of this settlement mechanism. He also doubts that the ties between Scranton and Grifols are limited to the ownership of the pharmaceutical company's headquarters and the transaction with BPC and Haema, which he says is being investigated by the CNMV.
It also focuses on a $59 million increase in Scranton's debt, which the company's financial statements show is related to “advance payments” from Grifols Worldwide. He questions how much Grifols has lent to Scranton in total in this way. Grifols is asked to clarify the credits to related parties of 113.4 million and assets to related parties of 321.3 million reported in its most recent financial statements and whether these items obscure further relationships between Grifols and Scranton .
Finally, the fund demands that Grifols clarify Scranton's shareholding distribution and how much the family controls. He states that “according to an article prepared on the basis of information published in 2011 by Scranton and Grifols”, the family controls 70% of the company, although the group had indicated in the last analyst conference that the Catalan family owned less than 20% controlled. As a final point, the Fund calls on Grifols to engage a forensic service to examine his allegations point by point and look into his accounts, in relation to the independent directors' order to Baker McKenzie to carry out an “independent analysis” of the company to carry out.”
The company itself responded to the bassist's new offensive: “Grifols took a clear position from the beginning and provided all the information required by the regulatory authority.” Legal proceedings are currently underway. We have nothing more to add.â€
Likewise, in a relevant fact sheet submitted to the CNMV, the company “once again categorically denies Gotham's malicious, false and misleading insinuations aimed solely at destabilizing Grifols and creating doubts among institutional investors.” Furthermore, they add, that “the Board of Grifols continues to reiterate its firm commitment to transparency, integrity and ethical behavior” and insist that the legal process remains open.
Despite the stock market decline, Banco Santander comments: “Gotham continues to reiterate governance issues between Scranton and Grifols that the market is already aware of and have been addressed,” emphasizing that nothing the hedge fund says changes the company’s valuation and perception the risk/leverage of the company. Furthermore, he points out that he sees “no problem” regarding the assets of 321.3 million with related parties.
In addition, Gotham has already achieved success in the war against Grifols. Take that into account
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