Pfizer Inc. is in the US high-grade bond market with a jumbo offering that’s lining up to be one of the largest ever sold.
(Bloomberg) — Pfizer Inc. is in the US high-grade bond market with a jumbo offering that’s lining up to be one of the largest ever sold.
The pharmaceutical giant is selling debt in eight parts, according to a person familiar with the matter, to help fund its purchase of Seagen Inc. The longest portion of the deal, a 40-year bond, is expected to yield 1.8 percentage points over Treasuries, said the person, who asked not to be identified as the transaction is private.
Pfizer’s latest bond offering will likely be the largest debt financing for a merger or acquisition so far this year, and among the biggest corporate bond offerings on record. The sale is targeting around $30 billion, according to the person familiar. When the acquisition was announced in March, Pfizer said it expected to finance the purchase with $31 billion of new, long-term debt, and the remainder from a combination of short-term financing and existing cash.
At $30 billion, the deal would rank alongside a few other sales as the fourth-largest corporate bond ever, according to data compiled by Bloomberg. It would match the amount sold by AT&T Inc. and Discovery Inc. in 2022 to help pay for the combination of their media businesses, as well as AbbVie Inc.’s 2019 offering for the acquisition of Allergan Plc, Bloomberg-compiled data shows.
Pfizer’s mega bond sale comes as the Federal Trade Commission sued to block Amgen Inc.’s $27.8 billion deal to buy Horizon Therapeutics Plc Tuesday, arguing the tie-up would stifle competition for the development of treatments for serious illnesses, Bloomberg reported.
Amgen borrowed $24 billion to help fund its $27.8 billion deal and might need to redeem those notes if the deal gets blocked. Pfizer’s acquisition of Seagen bypasses Amgen’s as the largest purchase to come to market this year. Jefferies LLC analysts led by Akash Tewari said in a research note that the lack of overlap weakens the FTC’s case, noting it could make the Pfizer-Seagen deal “a more difficult pitch to the FTC.”
The so-called special mandatory redemption language in the Pfizer deal — which determines whether the bonds will be repurchased or not if the deal doesn’t go through — was changed Tuesday, according to CreditSights analysts Eric Axon and Patrick Cunniff.
Representatives for Pfizer directed Bloomberg to existing public comments and had nothing further to add.
Pfizer began marketing the deal to investors on Monday. Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are leading the sale.
The New York-based company in March agreed to buy Seagen for $229 per share in cash, bringing the total enterprise value to about $43 billion. The acquisition is expected to close later this year or in early 2024.
–With assistance from Allan Lopez, Dayana Mustak and Andrew Kostic.
(Updates to add context throughout.)
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