MADRID: Spanish pharmaceutical firm Grifols said Wednesday it will take legal action against a US hedge fund that questioned its financial reporting, causing its shares to plunge. In a research note published Tuesday, Gotham City Research accused the Barcelona-based company of “manipulating” its reported debt and operational results to “artificially reduce” its debt ratio, and therefore its financing costs.

The report caused shares in Grifols, which makes blood plasma-based medicines, to close down nearly 26 percent on Tuesday, wiping out almost 2.2 billion euros ($2.4 billion) off the company’s market value. Gotham City is a prominent “short-seller” hedge fund that borrows stock in a company and sells it in hopes of buying it back cheaper later to return it to the lender and pocket the difference.

The stock was up 9.1 percent on Wednesday in early afternoon trading. In a regulatory filing on Wednesday, Grifols said it “will initiate legal actions against Gotham City Research for the significant financial and reputational damage caused to the company and to all its stakeholders.” “Grifols has been operating in the plasma sector for more than 100 years, it understands the business and its dynamics,” it added. Grifols also said its board fully supported its chief executive officer, Thomas Glanzmann, who has headed the company since December.

In a separate statement issued Tuesday, Grifols denied the allegations made by Gotham City Research, saying it had always shown “integrity” with its accounting. Spanish stock market regulator CNMV said it was analyzing the hedge fund’s report. The company traces its history back to 1909, first as a blood analysis and transfusion laboratory before specializing in products derived from blood plasma. Grifols has since expanded and is now present in over 30 countries including Australia, the United States and Japan. It posted revenue of over six billion euros ($6.6 billion) in 2022.— AFP