European markets took a pause for the traditional August break, with only one private equity-backed deal launching across the month — making it the slowest August for sponsored volume since 2011. However, the pipeline for new M&A-related issuance has been steadily building, setting up a return of new-money supply in the autumn.
Against this backdrop the share of European sponsored loan issuance accounted for by UK borrowers ramped up, while the volume of take-private transactions remains subdued.
LCD’s broadly syndicated loan forward calendar filled up during the summer, with the tally of sponsored transactions that are mandated but not yet launched to syndication standing at 13 deals totaling €6.9 billion (as of Sept. 16). Of these deals, ten are for M&A-related purposes and six are for buyouts specifically, while one backs a shareholder dividend.
Food for thought
For example, Ardian's acquisition of food-preparation brands Robot-Coupe and Magimix is likely to be financed by a €650-700 million cov-lite term loan B, according to market sources. Ardian has entered into exclusive negotiations to acquire majority stakes in the two kitchen brands from shareholder Hameur Group, which will also reinvest. While the dual-track process is in play, Ardian is leaning towards a deal backed by a broadly syndicated financing, with both euro- and dollar-denominated tranches, sources said, adding there will also be a revolving credit facility on top of the TLB.
Elsewhere, banks led by BNP Paribas and HSBC are preparing to syndicate a £1.4 billion debt package that will finance Apollo’s £2.7 billion acquisition of UK-based parcel delivery firm Evri from Advent, market sources have told LCD. The deal values the firm at roughly £2.7 billion, according to sources, and will include a mixture of sterling high yield bonds and euro-denominated term loans that will launch to general syndication soon. The final bank line-up will be finalised as soon as this week, sources added.
Alongside this activity, Ontario Teachers’ Pension Plan Board's investment in another UK-based company, Advanz Pharma, alongside existing sponsor Nordic Capital is financed through a debt package underwritten by JP Morgan and Barclays, which the UK-based pharmaceutical group expects to bring to market in the coming months.
Four of the 13 sponsored deals in the forward pipeline are also bound for UK-based issuers. Indeed, UK-based sponsored volume accounts for a 22% slice of total sponsored European loan issuance so far this year (to Sept. 16), which is the highest such percentage tracked across equivalent periods since 2018.
Private lessons
In a deal that could be only the third loan take-private so far this year, L’Occitane International has received an offer from its controlling shareholder to acquire the remaining shares of the skincare chain, in a €1.7 billion transaction financed through a combination of debt facilities provided by Credit Agricole, and additional financing from Blackstone and Goldman Sachs Asset Management.
The HK$34 per share offer from L’Occitane Groupe — controlled by chairman Reinold Geiger — would see the company de-listed from the Hong Kong Stock Exchange, with the current management team remaining in place.
A further take-private could also come if CD&Rs proposal to delist cybersecurity firm Exclusive Networks is approved, in a deal which would value the firm at €2.2 billion, or €24.25 per share.
Take-privates have made up just 13% of buyout deals so far this year — or just two out of the 15 transactions launched to syndication.
Sponsors are also looking to net add-on deals to bolster their buy-and-build strategies. For example, Diot-Siaci is planning a €300 million term loan add-on to support its acquisition of a 51% stake in Nasco’s direct brokerage and reinsurance business.
And finally, Lone Star Funds-backed XSYS has mandated banks to arrange a €250 million fungible term loan add-on to support the acquisition of MacDermid Graphics Solutions from New York-listed Element Solutions for $325 million. Sources say this deal equates to a low-teens acquisition multiple (pre-synergies). In addition to the term loan, the deal will be backed by an equity contribution of at least €70 million that will result in a net deleveraging for the combined company.
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