January 18, 2018 / 3:09 PM / a year ago

LPC-Bankers line up €1.2bn debt for Sanofi’s European drugs unit sale

LONDON, Jan 18 (Reuters) - Bankers have put together around €1.2bn of debt financing to back a potential sale of French drug maker Sanofi’s European generic drug business as the sale process kicks off, banking sources said.

Rothschild, JP Morgan and Morgan Stanley are advising on the sale of the unit, known as Zentiva, which could be worth more than €2bn.

The sale is expected to attract significant attention from private equity firms and industry peers and first round bids are due in an auction process on January 23, the sources said.

Sanofi was not immediately available to comment.

JP Morgan and Morgan Stanley are providing a staple financing to potential buyers equating to around 7.0 times Zentiva’s approximate €155m Ebitda, the sources said.

The staple includes senior leveraged loans and subordinated debt that could be in the form of high-yield bonds or second-lien loans, the sources said.

There will also be undrawn facilities, the sources added.

Other banks are also working on debt financings to offer to potential bidders as the asset is quite attractive from a financing perspective, the sources said.

“At seven times, there is not much more punchy a staple can get,” a senior banker said.

Staple financings can be attractive to potential buyers, reassured by a certainty of debt funding.

Sanofi started to disentangle the European generics business from its global operations toward the end of 2016, after announcing its plans to sell the unit. It said last year it was expecting to complete the sale by the end of 2018.

Sanofi finalised in January 2017 a US$20bn asset swap deal with German firm Boehringer for its Sanofi’s Merial animal health arm.

Editing by Christopher Mangham

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