Brookfield Negotiates Over $10B In Debt Financing For Acquisition Of Spanish Pharma Giant Grifols

Brookfield Asset Management is reportedly seeking 9.5 billion euros ($10.6 billion) in debt financing for a potential take-private deal for Grifols SA GRFS, a Spanish pharmaceutical company.

In a July regulatory filing, Grifols said that Brookfield Capital has confirmed that it has engaged in preliminary discussions with Grifols’s key shareholders regarding a potential joint offer to delist the company’s shares from the Spanish stock exchanges and NASDAQ.

The investment firm has approached banks to secure funding to refinance Grifols’ existing debt, which includes loans and high-yield bonds.

The move could result in significant financial restructuring, with participating banks committing to the initial financing before distributing it to investors.

The Bloomberg report notes that the deal could be critical for Grifols, as it might trigger a clause that allows bondholders to demand repayment at a premium—significantly higher than current trading levels for some of its bonds.

The prospect of the acquisition led to a notable market response, with Grifols’ 2028 bonds gaining over 6 cents to nearly 94 cents on the euro and the company’s shares rising by as much as 6.4% in Madrid.

The report notes that if the deal is finalized, it marks one of the largest takeovers of a publicly traded European company since 2022.

However, Brookfield’s ability to increase Grifols’ debt is limited, given that the company has been scrutinized for its leverage levels.

Three agencies downgraded Grifols’ credit rating this year, culminating in Moody’s Ratings discontinuing coverage in July.

In March, a new report by Gotham City Research questioned the company’s “transparency, integrity and ethical conduct.”

As per its February SEC filing, Grifols had previously denied Gotham City’s accusations, saying it had already replied to all of the questions raised in the latter’s reports.

In January, the European Central Bank initiated inquiries into several lenders, urging them to disclose their exposure to Grifols and its affiliated entities following Gotham City Research’s accusations of financial manipulation. 

Price Action: GRFS stock is up 10.2% at $7.92 at last check Wednesday.

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