MADRID (Reuters) - Shares in Spanish pharmaceutical Grifols soared on Wednesday morning after it disclosed a plan to reduce its stake in Shanghai RAAS in a deal that would bring in $1.5 billion.
Shares in Grifols, which produces drugs made out of blood plasma, were up 8.0% in morning trade after the company announced it was planning to change the shareholding structure in the Chinese company, of which it owns 26.20%.
Grifols would receive $1.5 billion if the deal goes ahead, the Spanish company said, without disclosing a buyer.
Grifols added it would keep a 'significant stake' in Shanghai RAAS, whose market value is 47.34 billion Chinese yuan ($6.61 billion).
China is Grifols' third-biggest market by revenue.
Brokerage CM Capital Markets said that if confirmed the sale would allow Grifols to reduce its debt and would boost its shares.
Grifols' net financial debt stood at 9.3 billion euros in the first quarter of the year, slightly above the 2022 levels and equivalent to seven times earnings before interest, taxes, depreciation, and amortisation (EBITDA). The company's target is to lower the debt to a ratio of four-to-one by 2024.
The company was hit at the start of the pandemic as plasma collection was restricted, sending its share price down by two-thirds from its early 2020 levels.
Since then it has sought to reassure investors with cost-cutting measures and a leadership change.
Grifols is the main shareholder in Shanghai RAAS, followed by RAAS China with a 4.65% stake, China Cinda Asset Management with a 4.14% stake and Hwabao Trust with a 3.98% holding, according to Refinitiv data.
($1 = 7.1615 Chinese yuan renminbi)
(Reporting by Matteo Allievi and Emma Pinedo, additional reporting by Tomás Cobos, editing by Inti Landauro)