Grifols: Brookfield’s potential $6.8 billion offer undervalues the firm

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MADRID (Reuters) -Grifols said on Tuesday that Canadian investment fund Brookfield’s potential 6.45 billion euro ($6.8 billion) offer significantly undervalued the Spanish drugmaker’s prospects and long-term potential, telling shareholders to stick to their shares.

Earlier on Tuesday, Brookfield said it was considering a public offer for Grifols at 10.50 euros per A share and 7.62 euros per B share, implying a company valuation of 6.45 billion euros.

The proposal is non-binding, Brookfield said in a filing to the Spanish stock market regulator.

The Canadian private equity firm said in July it was interested in making a takeover bid jointly with the Grifols family with the ultimate goal of taking the company private.

Grifols board met on Tuesday to consider the potential offer, and, in line with the company’s projection earlier in the day, decided that it “would not recommend that the shareholders accept the potential offer at the indicated price”, Grifols said in a statement after the market close.

Grifols shares had ended over 5% lower at 10.34 euros on Tuesday after recovering from an even deeper decline.

The company has lost about 30% of its market value since January, when short-seller fund Gotham City Research accused Grifols of overstating earnings and understating debt, which Grifols denied.

On Tuesday, an investigating magistrate at Spain’s High Court opened a probe into Gotham’s actions saying it had found enough evidence to merit an investigation into the possible violation of market and consumer protection laws.

($1 = 0.9472 euros)

(Reporting by Inti Landauro and Javi West Larrañaga. Editing by Andrei Khalip, Mark Potter)