Bonds Fluctuated
Case Study: Grifols
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10.3%
Between August 2024 and January 2025
Overview
Grifols, a prominent international company historically operated like a private Catalan family business, has encountered significant governance challenges and financial turbulence exacerbated by Covid-19 disruptions and acquisition-driven debt. In 2024, the company’s bond market activity reflected heightened volatility, predominantly influenced by the potential Brookfield takeover deal. Despite the SEC concluding its investigation without sanctions, governance concerns and shareholder pressures persisted. The situation intensified with Brookfield’s attempts to secure financing and negotiate share discounts, culminating in their withdrawal from the bid in November. As a result, Grifols’ bonds, particularly the Senior Secured Notes, faced significant asymmetrical risk, prompting a re-evaluation of investment recommendations amidst a backdrop of corporate restructuring and asset sales.
Grifols 2028 Senior Unsecured Notes
(cents)
Aug 21: LFI reports Brookfield raises €9.5bn for Grifols take-private.
Sep 2: LFI reports Grifols funds push for €15+ Brookfield bid.
Sep 7: LFI reports Brookfield’s bid for Grifols faces shareholder resistance over B shares discount.
Oct 1: LFI reports Brookfield requests more time for Grifols bid preparation.
Oct 3: CreditSights recommends selling Grifols bonds due to event risk.
Nov 4: LFI reports SEC ends Grifols probe without sanctions, CNMV opens disciplinary proceeding.
Nov 11: CreditSights advises caution on the Grifols bonds with high prices and 6% yield due to significant asymmetrical risk if Brookfield exits deal.
Nov 18: LFI reports Brookfield plans a €10.5 per share offer to privatize Grifols, valuing it over €7bn.
Aug 9: Covenant review reports changes in Grifols’ 2030 notes.
Nov 27: LFI reports Brookfield halts Grifols bid, citing valuation disagreements; bonds plummet by 6 cents.
Jan 16: CreditSights highlights ongoing activist pressure on Grifols for greater governance and disclosure, impacting bond stability.
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January 16, 2025
Activists Target Grifols: CreditSights notes activist pressure for better governance may affect bond prices, despite Grifols' strong pipeline and financial stabilizations; a Sell is recommended on the SUNs.
November 27, 2024
Brookfield Withdraws: LFI reports Brookfield will not proceed with its Grifols bid, leading to bond recovery after a CNMV notice and valuation disagreements. Prices fell by 6 cents instantly.
November 18, 2024
Brookfield's Bid: An LFI report detailed Brookfield's €10.5 per share offer to take Grifols private, valuing it over €7bn, amid refinancing completion and non-investment grade ratings from Fitch and S&P.
November 11, 2024
Grifols Q3: CreditSights reports strong financial performance but flags risks from Brookfield's pending due diligence. Despite improved metrics, uncertainty about the takeover affects bond appeal, advising caution due to potential deal fallout.
November 4, 2024
Grifols Cleared: The SEC ended its probe into Grifols without sanctions, while Spain's CNMV launched proceedings for potential reporting issues and against Gotham for possible market manipulation.
October 3, 2024
Grifols Challenges: CreditSights highlights governance and financial risks in Grifols amid Brookfield's potential takeover, advising caution on bonds due to uncertainties in the deal.
October 1, 2024
Grifols Bid Delay: LFI reports that Brookfield has requested more time from Grifols' board to prepare its takeover bid, as it seeks additional funding and plans to offer around €11 per share for Class A shares.
September 7, 2024
Grifols Takeover Tensions: LFI reports that Brookfield's attempt to secure a discount on Class B shares in its takeover bid for Grifols faces strong shareholder resistance, highlighting challenges in altering bylaws that protect shareholder rights.
September 2, 2024
Grifols Investor Push: LFI reports that major Grifols funds are advocating for Brookfield's bid to exceed €15 per share, reflecting their view of the company's fundamental value amidst ongoing takeover negotiations.
Auguts 21 2024
Grifols Securities Surge: LFI reports on the rally in Grifols bonds following a report on Brookfield's potential €9.5bn take-private bid, underscoring the market's optimistic response to anticipated refinancing opportunities.
August 9, 2024
Grifols Deep Dive: Covenant Review's analysis uncovered significant changes in the new Senior Secured Notes due 2030, offering enhanced insights into covenant protections.