Eurofins Shares Sink After Firm Targeted by Block’s Muddy Waters

Eurofins Scientific SE plunged the most in more than two decades after the laboratory-testing company was targeted by Carson Block’s Muddy Waters Research.

The shares fell as much as 25% in Paris trading, the steepest intraday decline since August 2003. The tumble wiped about €2.3 billion from Eurofins’s market value after Muddy Waters disclosed a short position and cast doubt on its financial statements, calling it “a company of oddities and contradictions.” 

The firm’s reports “could contain material overstatements of profits, cash balances, and other asset values,” the short seller said Monday. Eurofins didn’t respond to a request for comment. The company offers testing services to the food, pharma and cosmetics industries, among others. 

Read: Muddy Waters’s Latest Target Follows String of Notable Wins

Chief Executive Officer and Chairman Gilles Martin founded Eurofins in France in 1987 to commercialize technology created by his parents at the University of Nantes that helped ascertain the sugar content of wine. He and family members own about 33% of the shares and 66% of the voting rights.

The stock has lost almost two-thirds of its value since reaching a peak in September 2021, when unprecedented testing across the world during the Covid-19 pandemic provided a boost to Eurofins’s business. Among analysts tracked by Bloomberg, nine have a buy or equivalent rating, while five recommend holding and four have a sell.

It’s not the first time that Luxembourg-based Eurofins has been targeted by a short seller. In 2019, ShadowFall criticized the company’s governance, accounting at subsidiaries and debt levels. Eurofins defended its governance practices and rejected ShadowFall’s criticism as inaccurate and unfounded.

The themes in the Muddy Waters report, which include alleged related-party transactions and confusing cash disclosures from Eurofins, are “largely not new,” Jefferies analyst Allen Wells wrote in a note Monday.

Shares out on loan, an indication of short interest, represented about 10% of Eurofins’s free float as of Friday, according to latest data from S&P Global Market Intelligence.

With assistance from Thyagu Adinarayan.

This article was generated from an automated news agency feed without modifications to text.

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Published: 24 Jun 2024, 11:49 PM IST

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