(Reuters) - Global brewer SABMiller SAB.L is assembling a bank group for a multi-billion-dollar syndicated loan to back a fresh bid for Australian brewer Fosters, banking sources said on Thursday.
The acquisition loan, which will be one of the biggest deals of the year, is expected to be supported by relationship banks despite volatile market conditions.
“Investment-grade companies with a proven track record of being able to access different capital products will be fine,” a senior loan syndicator said.
SABMiller was in talks with banks in June over a possible $9 billion financing to back its initial A$4.90 per share bid.
The company said at the time that it intended to fund its A$9.5 billion ($9.7 billion) all-cash bid for Fosters with new debt and an existing $2.5 billion loan.
SABMiller, which is arranging the loan itself, is inviting banks to join advisers JP Morgan, Royal Bank of Scotland and Morgan Stanley, a second banker said.
Bankers and investors told Reuters on Wednesday that SABMiller was expected to renew its bid for Fosters with a slightly higher offer which is likely to succeed after rival bidders failed to appear.
SABMiller is expected to wait for Foster’s full-year results on August 23, which will make dismal reading with beer profits set to tumble, before increasing the pressure on Foster’s board to accept its current A$11.2 billion or slightly increased cash bid.
With Foster’s share price falling below SABMiller’s bid level recently, the offer has become more attractive and investors are now putting pressure on the Foster’s board to talk to SABMiller.
SABMiller tapped the loan market in May for a $2.5 billion, 5+1+1 year loan refinancing that was coordinated by Commerzbank and Bank of America Merrill Lynch. That financing pays a margin of 60 basis points (bps) over LIBOR.
SABMiller is rated BBB+ by Standard & Poor‘s, Baa1 by Moody’s and BBB+ by Fitch.
($1 = 0.974 Australian Dollars)
Reporting by Alasdair Reilly; Editing by Hans-Juergen Peters