(Bloomberg) -- A group of banks led by Wells Fargo & Co. sold a $1.6 billion leveraged loan Friday to help fund Tempur Sealy International Inc.’s proposed acquisition of Mattress Firm Group Inc. that the Federal Trade Commission is seeking to block.
The seven-year loan priced at 99.5 cents on the dollar with a margin 2.5 percentage points above the Secured Overnight Financing Rate, according to a person familiar with the matter who asked not to be identified as they’re not authorized to speak publicly. The margin for the deal, launched in late September, was set at the wide end of price talk.
The FTC sued in July to prevent Tempur Sealy, the world’s biggest mattress maker, from buying America’s biggest mattress retailer. Its complaint alleges a combined entity would “have the ability and incentive to suppress competition and raise prices for millions of customers.” Tempur Sealy last week said it plans to sell more than 100 of the companies’ stores.
Other firms have tapped the debt markets while acquisition completions were uncertain. Kroger Co. sold $10.5 billion of notes in August as its proposed purchase of Alberstons Cos. is being objected to in courts by the FTC, among others.
Moody’s Ratings assigned a Ba1 rating — its highest non-investment grade rating — to the Tempur Sealy loan while S&P Global Ratings gave its the lowest blue-chip grade of BBB-. Moody’s, which still has other Tempur Sealy ratings under review for possible downgrade, highlighted weaker mattress demand and heightened competition.
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