(Bloomberg) -- Banks including Goldman Sachs Group Inc and Citigroup Inc. are among 22 banks set to provide Clayton Dubilier & Rice with buyout financing for a stake in Sanofi SA’s consumer health division.
Lenders are expected to sign on to the deal to provide €8.65 billion ($9.4 billion) of euro- and dollar-denominated loan and bond financing in the coming days, according to people familiar with the deal, who asked not to be identified discussing private matters.
Seven lenders, including Barclays Plc, BNP Paribas SA, Citigroup Inc., Goldman Sachs Group Inc, Morgan Stanley and Societe Generale SA, are expected to act as global co-ordinators, the people said.
Banks are eager to return to funding leveraged buyouts after the first Federal Reserve interest rate cut in four years raised hopes that debt costs are finally starting to ease. Such deals are some of the most lucrative operations in finance and the Sanofi buyout is one of the biggest in Europe so far this year.
Citi was advising CD&R on the sale, while Goldman Sachs and Morgan Stanley were sellside advisors. JPMorgan Chase & Co. advised France’s PAI Partners on a rival bid. It’s unclear whether the Wall Street giant will be among lenders financing the CD&R deal.
Representatives from Citi, Goldman Sachs, Societe Generale, BNP Paribas, JPMorgan, Morgan Stanley and CD&R declined to comment. Sanofi referred all questions to CD&R. A spokesperson for Barclays didn’t immediately respond to requests for comment.
Fee squeeze
Fees are expected to be squeezed because so many banks are jostling to get involved. Global coordinators tend to take a leading role in the sell down of debt to institutional investors, entitling them to more fees. Up to four of the seven banks could take charge of the euro term loan, while other global coordinators could take a solo spot leading the sell down of the rest, the people said.
Banks have signed funding commitments for a €5.45 billion term loan B split between euros and dollars, with target pricing of 350 basis points over Euribor for the euro component, and 325 basis points over SOFR for the US dollar tranche, Bloomberg previously reported.
There is also a €2 billion bridge to high-yield bond financing, with caps of 7.5% for the euro bonds and 8.5% for the dollars.
Banks will also give around €1.2 billion of revolving credit facility.
CD&R will not be using the more than €1 billion of so-called back leverage that banks had lined up to help fund the equity check, as reported by Bloomberg. That’s because it has secured a more than €1 billion payment-in-kind loan from private credit funds, the people said.
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