(Bloomberg) – Potential bidders for Sanofi’s consumer health unit are considering a debt package of about 7.5 billion euros ($8.16 billion), the largest in recent years, according to people familiar with the matter. It will be a form of leveraged buyout financing.
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Potential buyers will approach both banks and direct lenders, said the people, who requested anonymity because the process is confidential.
According to a report by Bloomberg News, private equity firms Advent International, Blackstone, Bain Capital, CVC Capital Partners, EQT AB, KKR & Co. and others have expressed interest in the division, and the acquisition price is It is said that it could be worth about $20 billion. last month. Clayton Dubilier & Rice is also considering a potential bid, the people said.
Traditional lenders are making a big return to the market for financing risky trades after months on the sidelines as they struggled to unburden debt trades on their balance sheets amid soaring interest rates. , the field remains open to direct financiers.
Investors are now betting that interest rates have peaked, increasing confidence that banks can take on big acquisitions and sell debt through a wide range of syndicated loans. As a result, buyout firms are increasingly turning to banks to finance their transactions, as financing is cheaper than private credit.
CD&R declined to comment.
Sanofi announced in October that it plans to split the division, possibly through a stock market listing. On Friday, a representative said in response to questions about potential bidders looking to raise financing that Sanofi does not comment on market rumors. The company is still evaluating potential separation scenarios and believes a capital market transaction will most likely occur as early as the fourth quarter, a spokesperson said.
Bloomberg reported that advisers to the Paris-based drugmaker have told them they are open to a complete sale if they reach their desired valuation.
If banks win the financing business for the Sanofi unit, bidders are likely to tap into both the high-yield bond and syndicated loan markets and consider raising capital in both dollars and euros, the people said. That's what it means.
The company will borrow about 7.5 billion euros, just short of the $8.64 billion it raised from its partial acquisition of Worldpay and the $9 billion it raised from its purchase of Trust Financial's insurance brokerage business.
Elon Musk's 2022 acquisition of Twitter included a $12.5 billion debt package but ended with banks taking on risky loans.
In recent months, banks have won against direct lenders in big deals, including a $5 billion leveraged loan deal to help finance KKR & Co.'s purchase of Cotiviti stock.
The relatively limited number of leveraged buyouts has intensified the competition between banks and private credit. Investment banks, eager to restart their lucrative fee-income underwriting machines, are deploying private credit strategies such as offering delayed draw term loans and touting subordinated debt transactions, the riskiest type of underwriting. .
Sanofi's disposal of its consumer health division is in its early stages, and there is no guarantee that any of the private equity firms will make a formal offer. The division sells over-the-counter products such as Phytoxyl Cough Syrup and Icy Hot Pain Relief Gel.
–With assistance from Silas Brown.
(Updates Sanofi declines comment in 7th paragraph.)
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