(Bloomberg) -- Banks and private credit firms are competing to provide at least $5 billion of debt financing to help fund a potential buyout of Bausch + Lomb, according to people with knowledge of the matter.
A takeover could give the company a valuation of at least $10 billion including debt, the people said, asking not to be identified discussing a private transaction. The company has been exploring a sale and private equity firms Blackstone Inc. and TPG Inc. have been working on a joint bid to buy the eye care firm, people familiar with the matter said.
There’s no certainty that Bausch + Lomb will strike a deal as negotiations could fall apart or end without a sale.
Representatives for Bausch + Lomb and Blackstone both declined to comment. A representative for TPG did not immediately respond to a request for comment. Debtwire first reported details of the financing.
At $5 billion, the debt deal could become one of the largest ever arranged by private credit. Last year, private lenders provided $5.3 billion to refinance the debt of fintech firm Finastra Group Holdings Ltd. and €4.75 billion ($5.1 billion) to back the buyout of European classified company Adevinta ASA.
It would be also one of a handful of deals dedicated to financing buyouts to materialize in months as lenders have struggled to find ways to put money to work. Higher borrowing rates have thrown a wrench in the typical math for leveraged buyouts, making it harder for buyers and sellers to agree on price, which has caused private equity deal activity to slow.
However, this hasn’t slowed refinancings and repricings, which have kept the leveraged loan market busy. Last week, about $35 billion in deals launched, up from $11 billion the week prior, according to data compiled by Bloomberg. This surge has been propelled by the Federal Reserve’s rate cut and a desire to get ahead of potential volatility around the US election. But banks are still aggressively competing to win the more lucrative financing for mergers and acquisitions that do come to market.
Bausch + Lomb is a regular issuer in the high-yield bond and leveraged loan markets, which could ultimately help banks win the deal. In 2022, the eye health company got a $2.5 billion term loan in connection with its spinoff from Bausch Health Cos.
In February, banks undercut private lenders to provide $5 billion of financing for Cotiviti Inc., the largest leveraged loan so far this year. Morgan Stanley and Goldman were also able to poach nearly half of a $5 billion deal to refinance Ardonagh Group Ltd.’s debt from direct lenders.
--With assistance from Davide Scigliuzzo, Jill R. Shah and Michelle F. Davis.
(Updates with more information about the largest private credit deals and context around the leveraged loan market throughout.)
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