(Bloomberg) -- Mars Inc. is seeking to raise at least $1 billion through the sale of private debt ahead of its acquisition of foodmaker Kellanova, according to people with knowledge of the matter.
The US confectioner is in talks with institutional investors, including insurers and asset managers, who may be interested in the high-grade debt, said the people, who requested anonymity as the transaction is private.
A spokesperson for Mars declined to comment.
The private debt is expected to be issued in five-, nine- and 14-year maturities, with the five-year securities set to be priced at spreads of about 90-95 basis points over US Treasuries and the nine-year debt at 115-120 basis points over that benchmark, the people said. It’s not clear where the 14-year debt may price.
The sale is part of a broader financing for Mars — known for brands like Skittles and M&Ms candies — as part of its $36 billion acquisition of Kellanova.
The debt would refinance some of a $29 billion bridge loan from Citigroup Inc. and JPMorgan Chase & Co. that was extended to finance the buyout, which is being targeted to close in the first half of 2025.
Citi and JPMorgan declined to comment on the story.
The company is readying an investment-grade bond sale to help fund the acquisition. The issuance could occur in December, but it’s more likely to happen in the new year, Bloomberg previously reported.
The US private placement market acts as an alternative funding route for blue-chip businesses beyond public credit markets and bank loans. This year, luxury fashion house Chanel raised over €700 million ($737 million), while Europe’s largest supermarket retailer, Schwarz Group, whose businesses include Lidl and Kaufland, raised $1.8 billion.
--With assistance from Josyana Joshua.
(Updates with detail on potential bond sale in eighth paragraph.)
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