You may guffaw. Financing a $46bn cash takeover bid in the current strained environment sounds like a tough ask. The proposed deal would require a total package of between $50bn and $60bn.
But those plotting the approach by InBev for Anheuser-Busch are sanguine, FT Alphaville has been told. The advisory team, led by Lazard, has sounded out selected banks about the possibility of providing debt financing for the deal - and the response has been broadly positive.
Both JPMorgan and Santander have given early indications to the team that they would be prepared to stump up for a deal, based on initial discussions and the provision to the banks of confidential information. Goldman Sachs and Deutsche Bank are also thought to have approached InBev of their own accord to indicate their willingness to finance such a deal.
The proposed financing structure, for a deal pitched at $65 a share, would require debt of more than $40bn to be provided by two global leads, plus a sydicate of about six banks. The deal would also require a bridge facility, with a rights issue planned in 12 months time to raise $10bn to $17bn.
The leverage involved has been flagged up by advisers as one potential drawback of the transaction, FT Alphaville understands. It is thought that the deal would come out at about 4 times forecast ebitda, falling to about 2.5 times by the third year.
Sources with detailed knowledge of the deal told FT Alphaville that as part of teeing up the financing package for the deal InBev’s chief financial officer Felipe Dutra had had discussions with Jamie Dimon of JPMorgan, while former IMF chief Rodrigo de Rato was charged with getting Emilio Botin from Santander on board.
Despite credit ructions since last summer, and extreme relucatance to finance private equity-backed deals, the major banks have repeatedly shown that they are prepared to sign up to back strategic industry combinations. In sealing this brewing mega-merger, FT Alphaville has been assured that securing adequate funds is not thought to be a dealbreaker.
Helen Thomas and Neil Hume
