Goldman, Barclays Bust Into Jamie Dimon's Game
December 06 2017 - 3:48PM
Dow Jones News
By Liz Hoffman
Jamie Dimon, take note: There are two new members of the $20
billion loan club.
Goldman Sachs Group Inc. and Barclays PLC each will lend $20
billion to back CVS Health Corp.'s takeover of Aetna Inc.,
according to a regulatory filing late Tuesday. That puts them into
an exclusive club -- pretty much inhabited only by JPMorgan Chase
& Co. -- of big banks able to write checks of that size.
Bank of America Corp. will raise the remaining $9 billion of the
$49 billion in financing CVS needs for the $69 billion deal. The
transaction will combine CVS's pharmacy heft with Aetna's insurance
operation.
It is the fourth-largest package of takeover debt ever
assembled, edging past the $46 billion raised to fund the 2008
takeover of Anheuser Busch, according to Dealogic. The CVS
borrowing is the second-largest U.S. merger financing on
record.
The financing is a coup for both Goldman, which is pushing to be
more of a takeover lender, and Barclays, which under former
JPMorgan executive Jes Staley is trying to remain a top-tier player
in the mergers game. These are the largest checks either firm has
written for such a deal.
Takeover loans provide temporary financing for deals, bridging
the gap between when a transaction is signed to when permanent
funding can be locked down, typically through a sale of bonds.
For CVS, that is likely to happen in the spring. Meanwhile, its
lenders plan to sell up to half of their loans to a group of about
20 additional banks and began marketing the debt to investors this
week, according to people familiar with the matter. It is expected
to carry a low investment-grade rating.
J.P. Morgan, the largest U.S. bank by assets, has dominated the
market for deal-related megaloans. The firm, run by Mr. Dimon, has
gone into at least four deals for $20 billion or more: AT&T
Inc.'s pending takeover of Time Warner Inc.; the telecom giant's
2011 pursuit of T-Mobile US Inc.; the 2014 failed tie-up of AbbVie
and Shire PLC ; and the merger of drugmakers Actavis and Allergan a
year later.
Goldman is trying to do more takeover lending. The firm is
already a leading adviser in corporate M&A, but the real money
in deals is often from raising and distributing the billions of
dollars in bonds and loans needed to pull them off.
Last year, Goldman put a senior leveraged-finance banker in
charge of the push. It is leading a $13.7 billion financing for
Amazon.com Inc.'s takeover of Whole Foods Market Inc., and has also
won debt assignments for mergers involving chip maker Qualcomm
Inc., health-care services company Cardinal Health Inc. and
laboratory supplier VWR Corp.
Barclays' relationship with CVS runs deep. It advised on the
pharmacy chain's 2015 takeover of Omnicare Inc. and raised $13
billion solo for the effort.
Early merger talks between CVS and Aetna called for debt
financing of about $40 billion, and both banks got internal
approval for half of the amount, according to a person familiar
with the matter. When CVS's stock stumbled this fall, the mix of
consideration required more cash and Bank of America was brought in
to close the gap.
Write to Liz Hoffman at liz.hoffman@wsj.com
(END) Dow Jones Newswires
December 06, 2017 15:33 ET (20:33 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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