Brookfield Asset Management Ltd. BAM-T has pulled its €6.45-billion ($9.5-billion) offer to take Spanish drug maker Grifols SA private after failing to agree on the purchase price, walking away from the specialist pharmaceutical company that has expanded its business into Canada.
The private equity arm of Brookfield teamed up with the founding family behind Grifols to table a non-binding joint proposal to the Grifols board earlier in November, after months of negotiations. The proposal and its tentative offer price was publicly disclosed on Nov. 19, but Grifols resisted the takeover, saying the offer significantly undervalued the company.
The deadlock over the offer price came after months of talks and work to raise financing for a deal, and in spite of support from the Grifols family, who own nearly 30 per cent of the multinational pharmaceutical company’s shares.
Grifols specializes in producing blood-plasma-based products, which are part of life-saving medicines used to treat people with compromised immune systems from cancer treatment, autoimmune disorders or other reasons. Its push into Canada has included a controversial partnership with Canadian Blood Services to pay plasma donors, even though the national charity typically relies on voluntary donors.
“After extensive due diligence,” and considering the company’s reaction to the potential offer, “this morning Brookfield informed the Grifols Transaction Committee that in the current circumstances it is not in a position to continue with a potential offer for Grifols,” Brookfield said in a statement filed with Spanish regulators on Wednesday.
Spokespeople for Grifols did not immediately respond to a request for comment. But a Grifols family spokesperson confirmed Brookfield’s withdrawal to Reuters, citing “a discrepancy over the price.”
It is not clear if talks could be rekindled or if Brookfield could consider making a new bid.
Grifols shares fell 9 per cent to €9.69 on a Spanish stock exchange on Wednesday.
Bloomberg News first reported Brookfield’s decision to withdraw its proposal.
Grifols became an attractive takeover target earlier this year after a short-seller, Gotham City Research, accused the company of overstating its earnings and understating its debt, contributing to a plunge in the company’s share price. The company denied wrongdoing but made changes to its governance, leadership and regulatory reporting.
In spite of that pressure from investors, Grifols has a strong position in the health care market after years of rising demand from a number of countries for immunoglobin, which is used to treat sick patients. It is one of only three major global companies that specializes in plasma.
The Spanish company has pushed into new countries including Canada and Egypt by striking public-private partnerships, a strategy that sets it apart from its main rivals, Australia’s CSL Ltd. and Japan’s Takeda Pharmaceutical Co. Ltd. Grifols’s status as an agent for Canadian Blood Services helped it sidestep a ban on paying for plasma in Ontario, but other provinces such as British Columbia have resisted allowing it to operate.
With a report from Reuters News.