February 19, 2014 / 5:41 PM / 4 years ago

RLPC: Actavis in talks on $6.25-6.5B financing for Forest Labs buy

NEW YORK, Feb 19 (Reuters) - Generic drugmaker Actavis PLC has begun discussions with its core bank group to syndicate the $6.25-6.5 billion financing slated to back its acquisition of Forest Laboratories Inc, sources told Thomson Reuters LPC.

Bank of America Merrill Lynch and Mizuho Bank are leading the financing.

Bank of America Merrill Lynch declined to comment. Mizuho did not provide comment by press time. Actavis was not immediately available for comment.

The $6.25-6.5 billion financing is split between a term loan, a cash bridge loan and a bridge-to-bonds. The bridge-to-cash is expected to be around $3 billion, while the remaining amounts will be split between the term loan and bridge-to-bonds.

The company originally also aimed for a $1 billion term loan, but sources said this portion of the financing has been upsized to $1.75 billion. The bridge-to-bonds is expected to be roughly $2 billion.

The structure of the deal could change further as discussions are ongoing, sources added. The term loan will be additionally syndicated via a retail round to take place in the near term.

Bankers starved for investment grade new money opportunities are welcoming with open arms the loan, which backs the first investment grade acquisition of size this year.

Activity in the investment grade space in 2014 has been lukewarm, with volumes for January coming short compared with the previous three years. Bankers were betting on a pick-up in M&A activity to boost numbers for the quarter.

According to LPC data, volumes for January were $15.3 billion, compared with $17.8 billion and $21.2 billion in 2013 and 2012, respectively.

Actavis said on Tuesday it is acquiring Forest Laboratories for a combination of cash and equity valued at approximately $25 billion, or $89.48 per Forest share. If successfully completed, the transaction will combine two of the world’s fastest-growing specialty pharmaceutical companies, with combined annual revenues of over $15 billion anticipated for 2015, according to a company press release.

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