LPC-AB InBev raises lenders' hopes for jumbo financing
By Alasdair Reilly
LONDON, Sept 16 (Reuters) - The European loan market is pinning its hopes on a potential jumbo loan financing backing the merger of the world's largest brewer AB InBev and SABMiller, almost a year since the merger was last seriously considered, banking sources said.
The potential financing will be welcomed with open arms by European syndicated loan desks, many of which were set stiff budgets this year in expectation of a return of big-ticket European M&A. However, global volatility and poor growth expectations have hit borrower confidence and the level of European M&A financing this year has been disappointing.
"Let's hope this goes through. It could just about save our year," a senior loans banker said.
AB InBev will have to pay at least 40 pounds ($62) per SAB Miller share, and maybe as much as 45 pounds, according to analysts - implying an overall price of up to US$130bn, including SABMiller's debt, Reuters reported.
The potential financing, which could cover an estimated US$90bn-plus cash portion of an offer, is likely to include a large bridge loan element to be refinanced in the bond market and possibly in the loan market. Any deal would benefit from deep loan market liquidity, the bankers said.
"This has been something that has been contemplated for a long time by most of AB InBev's relationship banks. Although the figure considered is staggering, given where bank liquidity is at the moment, it is fully financeable in the bank market," the senior banker said.
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