Elanco lifts term B to $4.28 billion, flexes to Libor plus 175 bps

By Sara Rosenberg

New York, Feb. 4 – Elanco Animal Health Inc. upsized its seven-year term loan B to $4.275 billion from a revised amount of $3.7 billion as a $575 million term loan A was eliminated from the capital structure, according to a market source.

Also, pricing on the term loan B was reduced to Libor plus 175 basis points from Libor plus 200 bps, and the issue price firmed at par, the tight end of revised talk of 99.875 to par and tight of initial talk in the range of 99.5 to 99.75.

The term loan B still has a 0% Libor floor and 101 soft call protection for six months.

Included in the term loan B is a ticking fee of half the spread from days 46 to 90 and the full spread thereafter.

The term loan B was initially sized at $2.425 billion, but had been upsized earlier to $3.7 billion with the termination of plans for $1.275 billion of other secured debt.

The company’s $5.025 billion of credit facilities (Baa3/BB+/BBB-) also provide for a five-year $750 million revolver, which is expected to bear interest at Libor plus a margin ranging 150 bps to 225 bps, based on ratings, according to a press release.

Goldman Sachs Bank USA, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the leads on the deal.

Proceeds will be used to help fund the acquisition of Bayer AG’s animal health business for $5.32 billion in cash, subject to customary purchase price adjustments, and $2.28 billion or about 68 million Elanco Animal Health common shares. This represents a 70% to 30% cash-to-equity mix.

Closing is targeted for mid-year, subject to regulatory approval and other customary conditions.

Elanco is a Greenfield, Ind.-based animal health company that develops products and knowledge services to prevent and treat disease in food animals and pets.

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