The share price of Spanish pharmaceutical giant Grifols, accused by activist fund Gotham City Research of accounting manipulation, continued to fall as investors remain skeptical of the company's defense that denies any wrongdoing.
The share price of the Catalan group, a global leader in blood plasma-based drugs, was down 13.3 % at 09:45 GMT on a steady Madrid stock market. Since Tuesday, the share price of Grifols, whose market capitalization reached 8.7 billion euros on Monday night, has fallen almost 40 %.
This heavy fall followed accusations by Gotham City Research, a US fund specializing in short selling in financial markets, that Grifols had "artificially lowered" its debt ratio in recent years through "misleading practices" in its accounting.
In particular, the fund accuses the Catalan lab of consolidating the results of two companies, Haema and BPC Plasma, in its accounts, even though as of 2018 it has no direct stake in these entities and their results are already included in the accounts of its subsidiary Scranton Enterprises.
These allegations have been strongly denied by the Spanish group, which insists it has always demonstrated financial transparency. It announced it has filed a lawsuit against Gotham City Research for significant damage to" the company, "both financially and reputationally."
In an attempt to reassure markets, the Catalan lab organized a conference call with financial analysts on Thursday to defend its accounting management, which it said is subject to "robust" and "regular" oversight by auditing firm KPMG, which has never expressed any "reservations."
During the conference, Grifols CEO Thomas Glanzmann accused Gotham City Research of attacking his group for "speculative" purposes. He said the aim was "financial gain" and assured that the US fund had profited from the fall in Grifols shares.
But Mr. Glanzman's statement was not enough to reassure investors concerned about the company's high debt levels. "The market was waiting for a clearer explanation," Bankinter said in a research note, deeming a further fall in Grifols' share price "justified".
Spanish Economy Minister Carlos Cuerpo, speaking on state radio RNE on Friday morning, reiterated his call for "caution," noting that Spain's stock market regulator (CNMV) has launched an investigation into the allegations made by Gotham City Research.