A US subsidiary of Grifols and German group Siemens are considering an agreement to end various outstanding disputes between the companies, the Spanish company told the United States Securities and Exchange Commission (SEC). The deal is valued at US$43.3 million, approximately €40 million at current exchange rates. Grifols recently settled another lawsuit in the United States for a $16.75 million settlement.
The agreement is being negotiated between California-based Grifols Diagnostics Solutions (GDS) and its partner Ortho-Clinical Diagnostics on the one hand and Siemens on the other. The companies have spent several years in open disputes and claims for arbitration, which now appear to be resolved amicably.
“In 2022, GDS and Ortho-Clinical Diagnostics (“Ortho”) commenced a third arbitration against Siemens alleging failure to pay royalties under certain agency and licensing agreements. Siemens countered GDS and Ortho by claiming that, among other things, it was not owed these license fees. The parties are currently considering resolving all disputes between them, including the possible execution of a settlement agreement, new license and supply agreements, along with a payment of $43,300,000 from Siemens to GDS and Ortho-Clinical Diagnostics,” said Grifols in the annual report filed with the SEC.
The company also states in its filings that August 24 has been set for final approval of the agreement to settle a class action lawsuit filed in Illinois for $16.75 million. In that lawsuit, plaintiffs alleged that Grifols violated the Illinois Biometric Information Privacy Act. These plaintiffs donated plasma at one of the Grifols centers in Illinois and were required to scan at least one fingerprint to verify their identity as part of the process.
The plaintiffs alleged that Grifols violated the above law by failing to develop an adequate data retention policy and by collecting, using and storing the biometric data of tens of thousands of donors without obtaining their informed written consent . Although Grifols denies these claims by the plaintiff, it has reached an agreement to stay the case for the aforementioned $16.75 million, which was provisionally approved by the court on March 9, 2023.
Also in Illinois, but in an entirely different case, Grifols and Ortho are seeking Abbott to pay royalties on a patent related to HIV, the result of a 2019 agreement. Although an arbitrator ruled that Abbott paid $4 million to GDS/Ortho had to pay , the litigation continues and Abbott is trying to have the patent invalidated.
In its annual report to the SEC, Grifols reviews the risks facing the company and highlights debt, the company’s real Achilles heel in a time of rising interest rates. As of December 31, 2022, its current and non-current financial liabilities amounted to €10,756.2 million, of which a significant majority (€9,960.6 million) were long-term debt. The company says approximately €1,300 million and an additional $2,300 million are floating rate debt, 37% of the total.
“Our high level of debt could have a significant negative impact on our business,” the company acknowledges, listing the potential complications that can arise from such high levels of debt. It also notes that the agreements governing its debt contain various clauses that limit its ability to assume additional debt, pay dividends or distributions to Grifols shareholders, or write off or buy back share capital, conduct investments and other operations.
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