One of the games that can almost always be found in arcades in the United States is Whack-a-mole: a machine from which moles come out in a disorderly manner and the player must hit them with a sledgehammer. Grifols has been trying to get back on its feet for almost four years after the effects of the pandemic plunged the company into a debt and stock market crisis. But every time he tries, a blow reminds him that the problems are still there. This time the executioner was Gotham City Research, an investment firm that claims to fight corporate fraud but also acts as a pessimistic fund and has published a report against Grifols, in which its shares fell almost 26% this Tuesday. The American adventure returns like a boomerang to Grifols: in the United States, the Catalan pharmaceutical company specializing in blood products expanded greatly, but that is also where the problems began during the pandemic due to its high debts, and where it is now suffering. the accusations of the pessimistic fund.
The Gotham City Research report accuses the pharmaceutical company of artificially reducing its debt by fully consolidating on its balance sheets two companies, Haema and BPC Plasma, which Grifols bought in 2018 but then sold to Scranton Enterprises BV, an affiliate of the company Investment company, sold. Grífols family, already directors and former directors. Gotham City Research also doubts that Grifols can fully consolidate its US subsidiary Grifols Diagnostic Solutions, as China's Shanghai RaaS has controlled 45% of economic rights and 40% of political rights since 2020.
The Catalan multinational responded with two notices to the National Securities Market Commission (CNMV), stating that the allegations were false and that the audits carried out by KPMG proved this. Grifols states that despite selling the companies to Scranton Enterprises, the company retains operational control over them because it has a repurchase option and can therefore consolidate them into its accounts. In the second note, Grifols concludes that Gotham City Research's only goal “as a short-term fund” is to lower the price to make profits.
Although this news softened the fall – the stock ultimately fell 25% this Tuesday, but fell to its lowest level in the last decade during the day – the blow was significant for a historic company that is hard to ignore can get your head out. The blow was harsh because of the delicate business moment (amid a cost-cutting and divestment strategy to reduce debt) and also because of the symbolism: it is a howitzer against the way Grifols has expanded internationally, one of the pillars of this company, along with family control , which the markets were already responsible for diluting.
Family, Catalonia and international expansion
Grifols is one of the largest representatives in the history of the Catalan pharmaceutical industry, and to make matters worse, it was founded twice. First in 1909, when the hematologist Josep Antoni Grífols Roig founded an analytical laboratory in Barcelona, which was successful thanks to patents on blood transfusions and blood products at a time when these became very necessary during the European wars. In 1940, together with his two sons Josep Antoni and Víctor Grífols, he founded Lucas Laboratorios Grifols, a company that grew and found its first partners in the United States in 1960. It was a member of the third generation, Víctor Grífols Roura, who was the most persistent in this path and brought the company to the size it has today. He joined the company in the 1970s, after the death of his uncle Josep Antoni, precisely through collaboration with American partners. In 1987 he took over management of the company and founded the holding company Grup Grifols.
Relations with the United States were fruitful. In the 1990s, Grifols became the first Spanish company to obtain a license from the Food and Drug Administration (FDA) and continued its expansion in this country. In 2002, the company acquired SeraCare (now Biomat) and its 43 plasma donation centers across the United States – more specifically, BPC Plasma, which the Gotham City Research report focuses on, is a subsidiary of Biomat. The following year, the company bought Alpha Therapeutic's assets, including a plasma fractionation plant in Los Angeles, and in 2011 made the important purchase of the American company Talecris Biotherapeutics and began trading on the Nasdaq. The company also purchased Hologic there in 2017 and expanded its donation centers two years later. These and other purchases (particularly the German Biotest) resulted in a large size but also a significant debt of 9,000 million euros.
The pandemic had a full impact on their activities: unable to leave home, the plasma donation centers, especially the extensive network in the United States, were emptied and the entire operation suffered. The markets, which had until then approved the company's debt strategy and increased it to its maximum value (34 euros) in February 2020, suddenly became unsettled and the stock fell to its lowest point in October 2020. 2022, less than 9 euros. The changes in management were immediate: first, Víctor Grífols Roura, the architect of the expansion, resigned, and then the family handed over all management positions to CEO Thomas Glanzmann. Víctor Grífols Roura took the final step a few days ago when he left the council.
One of the keys to Grifols' importance to the United States is that, as Wikileaks revealed in 2010, the US government considered the Grifols factory in Parets del Vallès to be one of Spain's three strategic assets. Meanwhile, there is no shortage of voices pointing out that the United States will not mind if Grifols collapses on the stock market for geopolitical reasons, since its American subsidiary Grifols Diagnostic Solutions continues to hold a non-majority stake in Shanghai RaaS, despite the fact that Grifols now only owns 6.5% of the Chinese company after selling 20% of this company a few days ago.
Investing in cava or basketball
But Grifols hasn't just focused on the United States (where the company concentrates 60% of its investments and where more than half of its revenue comes from). The founding family had always had an eye on Catalonia and were active in Catalan social and business life, although they had moved their headquarters to Ireland, a country with lower taxes. His activities have been public – as Víctor Grífols Roura told former Generalitat President Artur Mas, who was preparing the 2014 independence referendum: “Move forward, don't give up” – and private: through Scranton Enterprises, he has invested in several companies and technology funds. And in the health sector, at the cava company Juvé & Camps, at the paper industry company Iberboard and at the real estate companies BeCorp or the luxury housing developer Francesc Macià 10. In 2018, the company also bought the Club Joventut de Badalona basketball team, which saved it from ruin.
Scranton Enterprises, based in Amsterdam, is the investment company that owns 8.67% of Grifols shares and is controlled by members of the founding family as well as directors and former directors of the company. Its main assets are Haema and BPC Plasma, which generate almost all of the company's revenue. It is one of the vehicles through which the family continues to control almost a third of the shares of the multinational: in addition there is the Deria company (which concentrates the holding of Víctor Grífols Roura and his four brothers) with 9.2% and the Ponder Trade companies and Raledor Holding Spain, representing other branches of the family, hold 7% and 6.15%, respectively. These companies are followed by three large funds owned by Grifols: Capital Research and Management (5.65%), Blackrock (3.9%) and Europacific Growth Fund (3%).
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