Goldman leads $9.1 billion bridge loan for Becton Dickinson-Reuters

(Reuters) – Medical equipment supplier Becton Dickinson & Co’s (BDX.N) acquisition of medical device manufacturer CareFusion (CFN.N) will be financed with a $9.1 billion bridge loan, bankers said on Tuesday.

Goldman Sachs is lead arranger and bookrunner on the 364-day senior unsecured bridge loan. Goldman Sachs will provide $2.75 billion of the bridge loan, with $6.35 billion coming from a wider syndication, according to an SEC filing.

The bridge loan will be refinanced by up to $9.1 billion of senior unsecured bonds, the filing said.

The two companies announced the acquisition on Sunday. Becton Dickinson will acquire CareFusion for $12.2 billion or $58 per share in cash and stock. The acquisition has been approved by the boards of both companies.

The loan pays a margin ranging from 100bp to 250bp over Libor depending on rating and date after signing, while there are commitment fees ranging from 10bp to 25bp, depending on rating.

There are also duration fees rising from 50bp 90 days after closing, to 75bp 180 days after closing and 100bp 270 days after closing.

Although several US acquisitions earlier this year chose to forgo the loan market and finance acquisitions directly with cash or bonds, companies returned to the loan market for bridge loans in the third quarter after an upturn in M&A activity.

Recent bridge loans include a $10.7 billion bridge loan backing GTech Corp’s $4.7 billion cash and stock acquisition of U.S. based International Game Technology (IGT); a $16.3 billion, 364-day bridge loan to back U.S. medical device maker Medtronic Inc’s (MDT.N) acquisition of Dublin-based Covidien Plc (COV.N); and a 13.5 billion pounds ($23.03 billion) loan backing U.S. drugmaker AbbVie’s (ABBV.N) 32 billion pounds acquisition of Dublin-based Shire Plc (SHP.L).

Becton Dickinson’s bridge loan will be replaced by a permanent financing in the form of available cash and unsecured bonds, the company said in a release.

Under the terms of the transaction, CareFusion shareholders will receive $49 in cash and 0.0777 per Becton Dickinson share for each CareFusion share, or a total of $58 per CareFusion share based on Becton Dickinson’s closing price on October 3.

The transaction is expected to close in the first half of 2015. Becton shareholders will own approximately 92 percent of the combined company on closing and CareFusion shareholders will own the remainder.

Becton Dickinson said that it is committed to maintaining an investment grade credit rating and that its current dividend per share will grow in line with its expectations for long-term earnings.

The company expects to suspend the share buyback program in the near-term to focus on deleveraging and paying a dividend.