LONDON Banks are putting together around 4 billion euro-equivalent of debt financing to back a potential sale of Anglo-Dutch consumer group Unilever’s (ULVR.L) margarine and spreads business, banking source said.
Unilever hired Goldman Sachs and Morgan Stanley on the sale, which could fetch as much as £6 billion. It follows a far-reaching review of Unilever's business prompted by February's unsolicited $143 billion takeover offer from Kraft Heinz.
The sale is expected to attract attention from a number of private equity firms and banks are lining up debt financings to back any of the potential bids.
“This is a classic transaction where a sponsor can add value as the spreads business is coming out of a huge corporate and a private equity firm can turn it around,” a senior banker said.
Some $4 billion of debt financing equates to around 6 times the unit’s approximate 650 million euro Ebitda. With adjustments, one banker placed Ebitda as high as 800 million euro.
The size of the financing is likely to vary until it is clear what the exact perimeters of the deal are and what is included in the sale. Unilever’s spreads business includes brands like Blue Band, Flora and Stork butter.
Both leveraged loans and high-yield bonds will be considered, denominated in sterling, euros and dollars.
“From a financing perspective you can do anything, loans and bonds in sterling, euros and dollars. It is a big business with a lot of liquidity and a global footprint,” the banker said.
(Editing by Christopher Mangham)