Anheuser-Busch Launches $7.5 Billion Debt Sale to Fund M&A
07/11/2012| 02:02pm US/Eastern
By Katy Burne
A unit of Anheuser-Busch InBev NV (BUD, ABI.BT) marketed $7.5 billion of bonds Wednesday--the maker of Budweiser beer's largest bond sale and the second-biggest debt offering of any company this year--to fund its acquisition of Grupo Modelo SAB de CV (GPMCY, GMODELO.MX).
The companies' revealed their plans to combine on June 29; under the $20.1 billion deal, Anheuser-Busch will buy the remaining stake in the maker of Corona Extra beer that it does not already own.
Anheuser-Busch InBev Worldwide's debt financing comes in four parts, or "tranches," and comprises $1.5 billion of three-year notes, $2 billion of five-year notes, $3 billion of 10-year debt and $1 billion of 30-year bonds.
The three-year notes are expected to price with a risk premium of 0.50 percentage point over comparable Treasurys; the five-year notes at a spread of 0.80 percentage point to Treasurys; the 10-year notes at 1.05 percentage points over Treasurys; and the 30-year bonds at a spread of 1.20 percentage points.
Leading the offering of the senior unsecured debt are Bank of America Merrill Lynch, Barclays, Deutsche Bank Securities and J.P. Morgan Chase & Co.
The largest sale of investment-grade bonds in the U.S. this year came from United Technologies Corp. (>> United Technologies Corporation), which sold $9.8 billion of debt on May 24 to fund its acquisition of Goodrich Corp.
Previously, Anheuser-Busch InBev Worldwide's largest debt sale had been a $5.5 billion, four-part offering in October 2009, said Dealogic, followed by a $1.05 billion, two-part deal in July 7 last year.
The 2011 deal featured three-year fixed and floating-rate debt that priced with a nominal interest rate, or coupon, of 1.5% and 0.36 percentage point over the London interbank offered rate, respectively.
The new bonds will be guaranteed by the issuer's parent company, Anheuser-Busch InBev SA/NV, Brandbrew SA, Cobrew NV/SA and Anheuser-Busch Companies, LLC.
The deal with Grupo Modelo is also being financed with some short-maturity loans.
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