Grifols SA’s Executive Chairman Thomas Glanzmann is taking over more powers from members of the founding family in the latest bid by the embattled Spanish blood plasma maker to shore up investor confidence in its debt-cutting credentials.
(Bloomberg) — Grifols SA’s Executive Chairman Thomas Glanzmann is taking over more powers from members of the founding family in the latest bid by the embattled Spanish blood plasma maker to shore up investor confidence in its debt-cutting credentials.
Glanzmann will take on the chief executive officer’s role with immediate effect as part of a management shake-up designed to ensure “a sharper focus on delivering results,” the company said in a statement to regulators on Monday. Former Co-CEO Victor Grifols Deu becomes chief operating officer, while Raimon Grifols, who had shared the CEO role with his nephew, is named chief corporate officer.
Shares advanced as much as 1.6% in Madrid trading on Monday before paring gains.
Glanzmann “will be responsible for the company’s business decisions while creating and implementing its short- and long-term strategies with the management team,” the company said.
The shuffle marks the latest attempt by the firm to bolster investor confidence shaken by the sudden resignation of former Chairman Steven F. Mayer in February just days after unveiling a €400 million ($441 million) efficiency plan.
Mayer’s cost-cutting drive was supposed to be a statement of Grifols’ intent to get to grips with leverage running at more than seven times its Ebitda as the firm also grapples with a jump in financing costs and looming debt maturities. He had unveiled plans to cut 8% of the workforce by slimming down the firm’s US plasma business while continuing to evaluate “strategic alternatives” to trim its debt pile.
Before today’s announcement, Grifols’ stock had fallen by a third since news of Mayer’s resignation broke on Feb. 21, the worst performer on the STOXX 600 Health Care Index over that period. Grifols will publish earnings for the first quarter on Tuesday.
“This change goes in the right direction,” Xavier Brun, head of equities at Trea Asset Management, said in emailed comments referring to the changes announced Monday. “What Grifols lacks is tangible facts of execution and this can only be seen over time.”
Grifols had appointed Mayer, a former senior managing director at Cerberus Capital Management LP, to the executive chairman’s role in October.
Founding Family
With Victor Grifols Roura becoming honorary chairman, his appointment meant the company would be led for the first time by someone who was not a member of the founding family, which still owns a 35% stake.
And then days after presenting his efficiency plan he was gone, citing health and other personal reasons. Glanzmann, the company’s vice-chair since 2017, replaced him.
Key to the challenge of winning round investors is for Grifols to present a clear goal and stick to it, while spelling out the sort of things it can do to cut debt and why they can be achieved, said Charles Pitman, an analyst at Barclays Plc.
There are signs that Grifols may be making some progress.
Shares jumped on Friday in the wake of a Citigroup Inc. report that predicted first-quarter results would come in at the top end of guidance. Management is “highly motivated” about speeding up the de-leveraging process, analyst Peter Verdult wrote.
Grifols’s claim that it is evaluating ways to cut debt has sparked expectations it could sell off assets, perhaps its stake in Shanghai RAAS or its diagnostics division. Grifols agreed to pay about $1.9 billion for a 26% stake in the Chinese company in 2019.
With two bonds totaling nearly €2 billion maturing in the first half of 2025, the task of tackling its debt load is becoming more pressing for Grifols. In its last earnings report in February, Grifols reiterated its aim to reduce debt levels to below four times its Ebitda by the end of 2024.
Meanwhile, Moody’s Investors Service cut the company’s credit rating by one notch to B2 in March, citing weak credit metrics and profitability still well below pre-pandemic levels.
(Updates shares, adds analyst comment from third paragraph.)
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