(Bloomberg) -- The $9.2 billion debt package to help finance Quikrete Holdings Inc.’s acquisition of Summit Materials Inc. is a sign that a long-awaited Wall Street wish could soon come true: the return of big-ticket buyouts.
The package is among the largest seen since 2022, when the Federal Reserve began lifting interest rates, ending the easy-money era. Wells Fargo & Co. agreed to provide the debt commitments, which include as much as $6.7 billion in bridge financing, according to a Monday filing.
Banks provide this type of financing on a temporary basis, for a big fee, and then later sell the debt to institutional investors in the leveraged loan and junk bond markets. The commitments are viewed as a win for banks, which regularly compete with private credit lenders to finance acquisitions, but also come with the risk that they will be unable to offload the exposure later, in what’s known as “hung debt.”
Both the syndicated leveraged finance markets and private credit lenders have been waiting for a return of large leveraged buyouts to bring in new supply for investors hungry for deals. Debt-funded acquisitions have been slow to return as buyers and sellers disagree over valuations, and as financing has remained relatively expensive. But there’s more optimism that the market could see a resurgence in 2025, especially following President-Elect Donald Trump’s return to the White House.
A representative for Wells Fargo declined to comment. A representative for Quikrete did not immediately respond to a request for comment, and Summit did not have a comment.
The Quikrete package also includes a $1.5 billion asset-based revolving credit facility, a type of loan typically held by banks and not syndicated to institutional investors.
Quikrete is a private, family-owned company that manufactures and supplies packaged concrete products. Its purchase of Summit Materials, which also makes construction materials, is valued at about $11.5 billion, including debt, and will help the firm capture a bigger share of the US market. It is expected to close in the first half of 2025, according to a Monday news release.
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