Grifols: Maintaining Our Fair Value Estimate as Board Does Not Support Potential Offer Price

Following an extraordinary meeting on Nov. 19, Grifols’ board will not recommend that shareholders accept a potential offer from private equity firm Brookfield, and we’re maintaining our EUR 10.90/$11.80 fair value estimates for class B shares, which assumes that Grifols remains a standalone company. A potential offer of EUR 10.50 per voting (class A) share and EUR 7.62 per nonvoting (class B) share would be well below our class B share valuation, implying a total valuation of roughly EUR 6.45 billion for all outstanding shares. Minority shareholders appear aligned on the board’s decision not to recommend accepting an offer at this price, and the decision also aligns with a prior analysis by the board’s transaction committee. While we think that Grifols’ novel treatments are eroding Grifols' competitive advantages, and we do not assign the firm an economic moat, we do think that the firm is steadily improving its profitability from a 2022 trough due to covid headwinds. We see solid prospects in the near to midterm for the growth of Grifols’ key plasma-derived therapies.