January 5, 2018 / 4:34 PM / in a year

M&A high-yield pipeline builds but no deals yet

LONDON, Jan 5 (IFR) - Deals in the making for Crown Holdings, Gruppo Argenta and Fedrigoni will further strengthen an already bustling high-yield M&A pipeline.

High-yield bonds will partly finance US packaging firm Crown Holdings’ acquisition of peer Signode Industrial Group Holdings, according to a banker on the deal.

Euro and US dollar bonds and a term loan B are in the making, the banker told IFR. Crown is purchasing Signode from The Carlyle Group for around US$3.91bn, according to the company.

Citigroup provided committed financing for the acquisition.

High-yield bonds could also back Swiss vending machine operator Selecta’s potential acquisition of Italian vending and coffee service provider Gruppo Argenta, according to two high-yield bankers.

An entity controlled by Selecta’s majority shareholder KKR will acquire Argenta. Selecta has the right to acquire Argenta directly from its private equity owner Motion Equity Partners, or after the acquisition is completed.

This is the latest acquisition for Selecta, which acquired Pelican Rouge in March 2017 with a €180m capital injection from KKR. This helped the issuer’s outstanding bonds’ performance, which once struggled as weakness in the vending machine sector fuelled concerns around liquidity.

Selecta, Argenta and Motion Equity Partners did not respond to requests for comment.

Paper and label producer Fedrigoni will also take to the high-yield market to back its takeover by Bain Capital, according to a banker on the deal. Fedrigoni, which was privately owned prior to the acquisition, will be a debut issuer in leveraged finance markets.

BNP Paribas, HSBC, UBI Banca and KKR will be the joint bookrunners on the associated financing, according to a statement from Bain Capital.

There are more M&A-related deals in the pipeline, including for Pure Gym’s buyout by Leonard Green & Partners, for Lowell’s takeover of several businesses of peer Lindorff, and for Unilever’s sale of its margarine and spreads business.

The financing backing the sale of Akzo Nobel’s speciality chemicals business could also include high-yield bonds.

M&A-related issuance in euros and sterling hit US$10.8bn-equivalent in 2017, its highest level ever, according to IFR data. But, with the vast majority of last year’s high-yield deals refinancing existing bonds, M&A trades did little to rebalance the market’s supply and demand. But that has the potential to improve this year.

“I think the M&A refinancing split may balance out a bit more,” the first banker said. (Reporting by Yoruk Bahceli, editing by Helene Durand, Ian Edmondson)

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