SANOFI-AVENTIS TO GET $10BN LOAN FOR GENZYME BID
Sanofi-Aventis SA, France's largest drug maker, has arranged about $10bn of underwritten loans to back its bid for United States biotechnology company, Genzyme Corporation. Bloomberg reported from Paris on Tuesday that the loans might be refinanced by bonds after the acquisition is completed, said two people familiar with the deal. The people, however, declined to be identified because the information was private.
JPMorgan Chase & Company, BNP Paribas SA and Societe Generale SA are providing the financing.
Banks are providing the most loans to fund purchases by European companies since 2008 as they look to invest rising profits. BHP Billiton Limited's loan underwriters attracted demand in excess of the $45bn sought to fund the miner's bid for Potash Corporation of Saskatchewan Incorporated, a person familiar with the situation said.
According to a credit strategist at Citigroup Incorporated in New York, Mr. Mikhail Foux, 'Banks have a lot of capital to deploy to the right clients, especially companies whose earnings have handily beat analysts' expectations over the last six quarters, have delivered and are now the darlings of the capital market.'
Sanofi spokesman, Mr. Jean-Marc Podvin, declined to comment on the details of the financing. The Paris-based company is bidding for Cambridge, Massachusetts-based Genzyme, the world's largest maker of medicines for genetic diseases, as products generating about 20 per cent of its revenue face generic rivals by 2013.
The drug maker had ¤4.7bn ($6bn) of cash and ¤8.8bn of debt at the end of 2009, according to its earnings report. Sanofi's second-quarter profit of ¤2.48bn beat the average forecast in a Bloomberg survey.
The deals from Sanofi and BHP would help more than double the amount of loans companies in Europe raised this year to fund acquisitions to more than $100bn, the most since 2008, according to data compiled by Bloomberg.
Demand has helped cut borrowing costs on five-year loans to companies with single A ratings to about 85 basis points over benchmark rates, from about 125 basis points a year ago, BNP Paribas data show.
Sanofi in July got ¤7bn ($8.9bn) of credit lines from 16 banks to refinance and extend the maturity of its debt. The company agreed to pay an initial interest margin of 45 basis points more than the euro inter-bank offered rate for the credit line, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.
Sanofi's Chief Executive Officer, Mr. Chris Viehbacher, approached Genzyme investors in meetings in New York earlier this week after Genzyme's board last month rejected his $18.5bn offer.