Grifols suffers stock market hit after regulator finds 'significant deficiencies' in financial reports

Catalan pharmaceutical stresses that market commission found accounting debts were accurate

Grifols headquarters in Sant Cugat del Vallès
Grifols headquarters in Sant Cugat del Vallès / Albert Cadanet
Catalan News

Catalan News | @catalannews | Barcelona

March 22, 2024 03:03 PM

March 22, 2024 03:11 PM

Grifols shares have taken a hit after a report on Thursday from Spain's National Securities Market Commission (CNMV) found "significant deficiencies" in its financial information. 

Although the Catalan pharmaceutical company's stock rose initially on Friday, by mid-morning it was down more than 3.5 %

On Thursday, the company had closed with shares worth €8.40, up 4.9%. It reached €8.70 early on Friday before falling to €8.10.  

The Catalan multinational pointed out in a statement that the CNMV report found that the debt listed in the company's accounts "corresponds to reality," and ruled out the need for a "reformulation."  

Grifols emphasized that the report did not find "significant errors" in its financial statements. 

Regardless, the multinational underlined its commitment to improve transparency and expand its breakdowns of financial information, in accordance with the recommendations made by the regulator. 

Regulator assessment 

The CNMV assessment pointed out that the "deficiencies" found "hindered investors' ability to properly understand" Grifols' "financial situation, results and cash flows." 

The report ruled out a sanction at this point, although it noted that "a full analysis of legality must be carried out, which could lead, or not, to the initiation of one or more sanctioning proceedings." 

Grifols filed the report in January in response to Gotham City Research's accusations that the pharmaceutical company manipulated its accounts to hide debt.   

In January, the markets regulator outlined its "firm determination to clarify the situation as soon as possible."  

The CNMV also said that it was "analyzing Gotham's conduct regarding the content of its report, how it was disseminated, and related market operations."

Gotham's accusations and Grifols' response 

Catalan multinational Grifols saw its stock market price plummet on January 9 following a report that accused the company of manipulating its accounts. 

The company's price dropped by as much as 40% during the course of that morning, after it initially appeared on the index without a price. 

The report, created by Gotham City Research investment fund, said that the company's shares were worth "zero." 

Grifols' CEO denied the fraud allegations and made commitments to improve company governance. Thomas Glanzmann said the claims in the short seller's report were "false." 

Grifols also announced it would take legal action against the hedge fund for the "significant damage caused" to the pharmaceutical company's finances and reputation.