Gartner gets $2.28 billion debt commitment for CEB purchase

By Sara Rosenberg

New York, Jan. 5 – Gartner Inc. has received a commitment for a $1,375,000,000 seven-year covenant-light senior secured term loan B, an up to $600 million senior unsecured high-yield bridge facility, which is expected to be replaced with senior unsecured notes, and an up to $300 million 364-day senior unsecured bridge facility to help fund its acquisition of CEB Inc., according to an 8-K filed with the Securities and Exchange Commission on Thursday.

J.P. Morgan Securities LLC and Goldman Sachs Bank USA are the lead arrangers and bookrunners on the deal.

The commitment letter outlined term loan B pricing as Libor plus 275 basis points with an original issue discount of 99.5.

The letter also stated that the term loan B would have 101 soft call protection for six months and amortization of 1% per annum.

Pricing on the 364-day bridge loan, as committed, is Libor plus 275 bps, stepping up by 25 bps after 180 days and by an additional 25 bps every 90 days thereafter.

Lastly, pricing on the high-yield bridge loan, as committed, is Libor plus 450 bps, stepping up by 50 bps every 90 days, with a 1% Libor floor.

Pro forma net leverage is expected to be around 4.25 times, inclusive of cost synergies.

The company anticipates to delever to around 3 times gross leverage within 24 to 36 months post-closing.

The debt commitment letter also contemplates certain amendments to Gartner’s existing credit agreement to allow for the acquisition and the incurrence of debt.

Under the agreement, CEB is being bought for $54.00 in cash and 0.2284 of a share of Gartner common stock for each share of CEB common stock they own, implying 70% cash and 30% stock consideration for the offer.

The transaction has a total enterprise value of about $3.3 billion, including the assumption of about $700 million in CEB net debt.

Other funds for the acquisition will come from cash on hand.

There is a 35-day “go shop” period.

Closing is expected in the first half of 2017, subject to the approval of CEB shareholders, regulatory approvals and customary conditions.

Gartner is a Stamford, Conn.-based information technology research and advisory company. CEB is an Arlington, Va.-based best practice insight and technology company.

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