Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Bank trio lead $13 billion debt for Blackstone's Thomson Reuters unit bid

Published 30/01/2018, 16:00
© Reuters. FILE PHOTO -  The Thomson Reuters logo on building in Times Square, New York
C
-
BAC
-
BX
-
BRKa
-
TRI
-

By Claire Ruckin and Andrew Berlin

LONDON (Reuters) - Banks are lining up a jumbo leveraged financing of around $13 billion (£9.23 billion) to back U.S. private equity firm Blackstone Group’s (N:BX) potential acquisition of a 55 percent stake in the Financial and Risk business of Thomson Reuters Corp (N:TRI) (TO:TRI), banking sources said.

Bank of America (NYSE:BAC) Merrill Lynch, Citigroup (NYSE:C) and JP Morgan are expected to lead the debt financing, if the deal goes ahead, with several other banks due to the large size of the underwriting, the banking sources told Loan Pricing Corp.

Thomson Reuters said in a statement late on Monday that "it is in advanced discussions with Blackstone regarding a potential partnership in its F&R business." The deal values the unit at about $20 billion, consisting of about $7 billion in equity and $13 billion in debt.

The financing is expected to be led from New York and comprise leveraged loans and high yield bonds, denominated mainly in dollars, sources said. It is also expected to include euro tranches, they added.

A $13 billion financing would give leverage of around 7.5 times, based on last 12 months Ebitda of approximately $1.7 billion for the F&R unit. Senior leverage of roughly 4.5-5.0 times could give a loan of $8 billion - $9 billion, and junior debt of $4 billion - $5 billion, sources said.

Another source familiar with the matter said that leverage was expected to be below 6.0 times.

Although the size of the financing is challenging, liquid banks and investors are eager to lend to new buyouts as the strong level of global demand continues to exceed supply.

“The market capacity for Europe is about €5 billion between loans and bonds and in the U.S. is $10 billion - $15 billion, so if there is a big deal that pushes capacity and the business has revenue globally it would make sense to have euro and dollars in loans and bonds to create a competitive dynamic in order to get best execution,” a senior banker said.

It is the largest LBO loan financing since 2013 when ketchup maker HJ Heinz raised a $14.1billion financing to back its buyout by Warren Buffett's Berkshire Hathaway (NYSE:BRKa) and 3G Capital.

Thomson Reuters and Blackstone declined to comment.

Thomson Reuters' board is expected to meet on Tuesday to discuss Blackstone's offer for the F&R business, which supplies news, data and analytics to banks and investment houses around the world. The unit contributes more than half of Thomson Reuters' annual revenues.

Under the terms of the Blackstone offer, Thomson Reuters would retain a 45% stake in the F&R business in partnership with the US buyout firm.

Loan Pricing Corp is a unit of Thomson Reuters.

© Reuters. FILE PHOTO -  The Thomson Reuters logo on building in Times Square, New York

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.