Organon sets price talk in $4.5 billion equivalent three-part deal, pricing Thursday

By Paul A. Harris

Portland, Ore., April 7 – Organon & Co. set price talk in its $4.5 billion equivalent offering of notes in three tranches on Wednesday, according to market sources.

Talk is as follows:

• $2 billion seven-year senior secured notes, callable after three years at par plus 50% of the coupon, are talked to yield 4 1/8% to 4¼%, in line with initial talk in the low 4% area;

• $1 billion equivalent euro-denominated seven-year senior secured notes, callable after three years at par plus 50% of the coupon, are talked to yield in the 3% area, tight to initial talk in the low 3% area; and

• $1.5 billion 10-year senior unsecured notes, callable after five years at par plus 50% of the coupon, are talked to yield 5 1/8% to 5¼%, well inside of initial talk in the mid-to-high 5% area.

With respect to the dollar-denominated tranches, demand is bunched in the unsecured notes, according to a bond trader who said that the $1.5 billion tranche was heard to be playing to $6 billion of demand on Wednesday.

The $2 billion secured tranche was playing to $4 billion of demand.

Dollar-denominated books closed late Thursday. Euro-denominated books are set to close very early in the New York morning, and the Rule 144A and Regulation S for life notes are set to price later on Thursday.

Left lead bookrunner Morgan Stanley & Co. LLC will bill and deliver. J.P. Morgan Securities LLC, BofA Securities Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC and HSBC Securities (USA) Inc. are joint bookrunners.

Mizuho Securities USA Inc., Wells Fargo Securities LLC, Barclays, RBC Capital Markets LLC, Santander Investment Securities Inc. and SG Americas Securities LLC are co-managers.

Upon release from escrow the proceeds plus cash on the balance sheet and proceeds from a term loan will be used to fund a dividend to Merck & Co., Inc., related to Organon's spinoff from Merck.

The issuing entity will be Organon Finance 1 LLC, to be assumed by Organon & Co.

The Kenilworth, N.J.-based company was created by Merck's spinoff of its women’s health, trusted legacy brands and biosimilars businesses.

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