Mason Capital Reiterates Corporate Governance Shortcomings and Mismanagement of Grifols Under Current Board of Directors
Mason Capital Management, holding 2.1% of Grifols (GRFS) class A shares, has sent a letter criticizing the company's board for corporate governance issues and poor capital allocation decisions. Mason demands the addition of Paul Herendeen to the Board to restore independent oversight. The letter highlights concerns about conflicts of interest, particularly regarding Tomas Daga's role in major transactions and Osborne Clarke Spain's involvement. Mason argues that recent acquisitions like Biotest have contributed to a ~50% destruction of shareholder value. The firm opposes a rumored Brookfield take-private bid at €10.50 per share, stating it significantly undervalues the company.
Mason Capital Management, che detiene il 2,1% delle azioni di classe A di Grifols (GRFS), ha inviato una lettera in cui critica il consiglio di amministrazione dell'azienda per questioni di governance aziendale e scelte sbagliate nella gestione del capitale. Mason richiede l'aggiunta di Paul Herendeen al Consiglio per ripristinare un controllo indipendente. La lettera evidenzia preoccupazioni relative a conflitti di interesse, in particolare riguardo al ruolo di Tomas Daga nelle principali transazioni e al coinvolgimento di Osborne Clarke Spagna. Mason sostiene che recenti acquisizioni, come quella di Biotest, abbiano contribuito a una distruzione di valore per gli azionisti di circa il 50%. L'azienda si oppone a una presunta offerta di Brookfield per il take-private a €10,50 per azione, affermando che questo svaluta significativamente l'azienda.
Mason Capital Management, que posee el 2.1% de las acciones de clase A de Grifols (GRFS), ha enviado una carta criticando al consejo de la empresa por problemas de gobernanza corporativa y decisiones ineficientes en la asignación de capital. Mason exige la inclusión de Paul Herendeen en el Consejo para restablecer la supervisión independiente. La carta destaca preocupaciones sobre conflictos de interés, especialmente en relación con el papel de Tomas Daga en las transacciones importantes y la participación de Osborne Clarke España. Mason argumenta que adquisiciones recientes como Biotest han contribuido a una destrucción de valor de aproximadamente el 50% para los accionistas. La firma se opone a un rumor de oferta de Brookfield para privatizar a €10.50 por acción, afirmando que esto subestima significativamente a la empresa.
Mason Capital Management는 Grifols (GRFS) A 클래스 주식의 2.1%를 보유하고 있으며, 회사의 이사회에 대한 비판 서한을 보냈습니다. 이 서한은 기업 지배 구조 문제와 자본 배분 결정의 부재를 언급하고 있습니다. Mason은 독립적인 감독을 복원하기 위해 Paul Herendeen을 이사회에 추가할 것을 요구합니다. 이 서한은 이해 충돌에 대한 우려를 강조하며, 특히 주요 거래에서 Tomas Daga의 역할과 Osborne Clarke 스페인의 개입에 대해 언급합니다. Mason은 Biotest와 같은 최근 인수가 주주 가치를 약 50% 감소시켰다고 주장합니다. 이 회사는 Brookfield의 주당 €10.50에 대한 비공식적인 인수 제안에 반대하며, 이는 회사를 크게 저평가한다고 전했습니다.
Mason Capital Management, détenant 2,1 % des actions de classe A de Grifols (GRFS), a envoyé une lettre critiquant le conseil d'administration de l'entreprise pour des problèmes de gouvernance et de mauvaises décisions d'allocation de capital. Mason exige l'ajout de Paul Herendeen au Conseil pour rétablir un contrôle indépendant. La lettre met en lumière des préoccupations concernant les conflits d'intérêt, notamment concernant le rôle de Tomas Daga dans des transactions majeures et l'implication d'Osborne Clarke Espagne. Mason soutient que des acquisitions récentes comme Biotest ont contribué à une destruction d'environ 50 % de la valeur des actionnaires. La société s'oppose à une offre de rachat de Brookfield à 10,50 € par action, affirmant que cela sous-évalue significativement l'entreprise.
Mason Capital Management, das 2,1% der A-Aktien von Grifols (GRFS) hält, hat einen Brief an den Vorstand des Unternehmens geschickt, in dem er Unternehmensführungsprobleme und schlechte Kapitalallokationsentscheidungen kritisiert. Mason fordert die Hinzufügung von Paul Herendeen zum Vorstand, um die unabhängige Aufsicht wiederherzustellen. Der Brief hebt Bedenken hinsichtlich von Interessenkonflikten hervor, insbesondere im Hinblick auf die Rolle von Tomas Daga bei wichtigen Transaktionen und das Engagement von Osborne Clarke Spanien. Mason argumentiert, dass jüngste Übernahmen wie Biotest zu einer Zerstörung des Shareholder-Werts von etwa 50% geführt haben. Das Unternehmen spricht sich gegen ein gemunkeltes Übernahmeangebot von Brookfield zu 10,50 € pro Aktie aus und erklärt, dass dies das Unternehmen erheblich unterbewertet.
- Family board member demonstrated confidence by purchasing shares at €15.41 in December 2023, indicating higher perceived fair value
- Stock value has declined ~50% over past three years
- Biotest acquisition currently contributes less than €5 million of EBITDA
- Diagnostics earnings have collapsed since acquisition
- Poor corporate governance and conflicts of interest affecting company valuation
- Potential take-private bid at €10.50 represents significant discount to fair value
Believes Substantially Greater Value Than Any Brookfield Bid Can Be Realized by Ousting Conflicted Directors and Restoring Majority Control of Independent Shareholders
Demands Rightful Addition of Paul Herendeen to the Board via Voluntary Appointment or Shareholder Vote
In a November 8, 2024 letter sent by Mason to the Board, Mason urged the immediate implementation of a series of actions to address the Company’s corporate governance shortcomings.
In the Board’s response received by Mason on November 12, 2024, the Board followed just one of Mason’s recommendations, disclosing – for the first time – that conflicted members have stepped down from the Independent Transaction Committee formed to evaluate the rumored transaction with Brookfield Asset Management LP. Otherwise, the Board defended its track record of poor capital allocation, including the acquisitions of Novartis, Hologic NAT, and Biotest, while remaining silent on key questions about other blatant conflicts of interest, including the amounts Osborne Clarke Spain was paid to advise Grifols on these transactions, and refusing to facilitate the appointment to the Board of Paul Herendeen. The Board’s response is attached to this press release.
The full text of Mason’s November 19, 2024 letter follows:
November 19, 2024
Grifols, S.A.
Avinguda de la Generalitat 152-158
08174 Sant Cugat del Vallès
Dear Grifols Board Members and Shareholders;
Mason appreciates the response to its letter received on 12 November 2024. The Board’s responses mostly confirm the points raised in our original letter while remaining silent on key questions about conflicts of interest.
The Board confirms that Tomas Daga “led” historical major transactions, including Diagnostics and Biotest. The Board offers a weak analysis defending these transactions despite the simple facts that Diagnostics earnings have collapsed since the acquisition,(1) and Biotest currently contributes less than
The Board’s response attempts to distance Tomas Daga and Osborne Clarke Spain (e.g., Daga “holds no position of control in the law firm”), but it fails to disclose that Osborne Clarke Spain was previously known as Daga y Sauret(3); Tomas Daga and Osborne Clarke Spain are inexorably linked.
It is notable that the responses did not disclose the amounts Osborne Clarke Spain was paid for advice on these transactions. The
We commend that at least one of our recommendations was followed; conflicted members have stepped down from the Independent Transaction Committee. However, even this action raises additional questions: when was the decision made to remove the directors from the committee? Why were the market and the CNMV not notified of this material information? The lack of disclosure further highlights the Company’s corporate governance shortcomings.
Yesterday’s stock price reaction to a planted newspaper article describing a
The Board is attempting to take advantage of its own failings which have inflicted large losses on all shareholders. All Directors have a duty to all shareholders. Directors should consider whether correcting the conflicts keeping investors away creates more value than a bid from the family and
We are pleased that the Board purports to be committed to adding new qualified Independent Directors. Mason and other grouped minority shareholders have submitted such a director, Paul Herendeen. However, instead of engaging with its shareholders, the Board demanded proof of ownership for shares minority shareholders clearly owned, indicating a lack of seriousness in addressing shareholder concerns. The grouped minority shareholders have now fulfilled the Board’s tedious requests, and either Paul Herendeen should be added to the Board or an AGM held immediately.
Mason is actively speaking to new directors and shareholders. There is consistent agreement on our views and eagerness to be part of the turnaround of a company that has been mismanaged.
Regards,
Kenneth M Garschina
Managing Member
Mason Capital Management
About Mason Capital Management LLC
Mason Capital Management LLC is an absolute return focused investment firm that combines deep fundamental analysis with hard catalysts to drive value creation. Founded in July 2000 by Ken Garschina and Mike Martino, Mason’s strategies range from event-driven investing to corporate carve-outs and control acquisitions.
(1) Diagnostics EBITDA has declined on average
(2) Biotest’s
(3) “Osborne Clarke abre oficina en
(4) Raimon Grifols Roura purchased 5,838 shares on 12/29/2023
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Jonathan Gasthalter/Sam Fisher
Gasthalter & Co.
+1 (212) 257-4170
Source: Mason Capital Management LLC
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