Grifols - comment

The investment opportunity in Grifols is about to become more interesting as initial indications are the Brookfield take-private bid will be rejected.  The Spanish regulator forced Brookfield’s bid, which is indicative and non-binding, due to media speculation.  The indicative bid was €10.50 for the A-shares and €7.62 for the B-shares.  The Company would require a change in the bylaws of the Company, via shareholder vote, to allow two separate prices for A and B shares.  

Grifols SA board recommended that shareholders reject the indicative offer on the view that it significantly undervalued the Company’s value.  Grifols shares have traded down 5% on Tuesday.  The bonds, which had previously traded up due to a 101% change of control have traded down to 93% yielding 6%.  In the absence of a bid, fair value should be wider than 6%.