Grifols, a Spanish pharmaceutical company, saw its shares drop following questions raised by short seller Gotham City Research regarding the company’s connections to shareholder Scranton Enterprises.
Share Price Fluctuations
As of 1355 GMT, Grifols shares were down 0.3% at EUR10.94, experiencing a significant decline of up to 7% earlier in the trading session. Since the release of Gotham’s report on January 9th, the stock has witnessed a decrease of approximately 25%.
Scrutiny and Rebuttal
Gotham City Research recently reiterated its concerns by posing a series of inquiries to Grifols on its website. These questions focused on the nature of the relationship between Grifols and venture capital firm Scranton, along with the ownership and control of Scranton. Additionally, previous allegations regarding the consolidation of assets on financial statements by both Grifols and Scranton were addressed.
Company Response
Grifols promptly denounced what it deemed as baseless implications from Gotham and confirmed its pursuit of legal action against the short seller since late January.
Ongoing Developments
Despite these developments, Gotham has yet to provide a response to Dow Jones Newswires regarding the ongoing litigation. Similarly, Scranton has not issued a statement in response to the allegations.
It’s worth noting that FactSet data indicates Scranton currently holds an 8.4% stake in Grifols.
Grifols Family Members Hold Stake in Scranton
Three members of the Grifols family own shares in Scranton, representing a stake of less than 20%, according to Grifols executive chairman and departing CEO, Thomas Glanzmann. This revelation came during a recent conference call following a critical report by Gotham regarding Grifols’s financial reporting.
Allegations and Rebuttal
Gotham’s report raised concerns about Grifols’s debt-to-earnings ratio, suggesting it could be worse than reported. Additionally, Gotham deemed Grifols’s shares as “uninvestable” and potentially worthless. Grifols, on the other hand, refuted these claims and denied any wrongful accounting practices.
Regulatory Involvement
The report’s impact prompted Spain’s stock-market regulator, CNMV, to engage with Grifols for further investigation. CNMV stated that it was actively analyzing data and reassured that, as of now, there is no evidence indicating non-compliance with regulations on Grifols’s part.
Leadership Changes
In light of recent developments, Grifols announced the appointment of Nacho Abia as the new CEO effective April 1. Additionally, Raimon Grifols and Victor Grifols Deu will step down from their executive roles while maintaining their positions on the board.