Mega PE Deals Are Back
Blackstone agreed to buy Busch Entertainment from Anheuser-Busch InBev for $2.7 billion on Wednesday, the same day CD&R backed the $2.6 billion recap of JohnsonDiversey.
October 8, 2009
A pair of private equity transactions sponsored by New York’s Blackstone Group and Clayton Dubilier & Rice marks the return of the mega private equity deal in the U.S.
Blackstone agreed to buy theme park operator Busch Entertainment Corp. from Anheuser-Busch InBev for $2.7 billion on Wednesday, the same day CD&R announced it was backing the $2.6 billion recapitalization of JohnsonDiversey Inc.
A major bank syndicate comprised of Bank of America Merrill Lynch, Barclays Capital, Deutsche Bank, Goldman Sachs and Mizuho Corporate Bank are funding Blackstone's purchase with senior bank debt. While financial details weren't released, the LBO commanded $950 million in term loans from the syndicate and $450 million in subordinated financing supplied by Goldman Sachs Mezzanine Partners and Blackstone unit GSO Capital Partners, according to published reports.
CD&R, meanwhile, tapped Barclays Capital, HSBC Securities (USA) Inc., Natixis, Rabobank Securities and RBC Capital Markets for $1.9 billion in debt financing, in a deal that infuses $477 million of equity funding into commercial cleaning company JohnsonDiversey.
The two deals are significant for another reason beyond their sheer size, said one veteran M&A banker.
"What it really tells you is that commercial banks are back in the game, but they have a bias towards the largest transactions," said Paul Weisbrich, senior managing director at McGladrey Capital Markets, a Costa Mesa, Calif., investment bank.
From a strategic standpoint, Weisbrich said, Anheuser-Busch InBev's divestiture of the Orlando, Fla., operator of the Sea World and Busch Gardens amusement parks represents a move that will help the beer giant to narrow its focus at a time when "the beer world has become extraordinarily consolidated."
Media speculation has swirled around Mexican beer maker Grupo Modelo as a possible takeover target in strategic M&A over the past year. Anheuser-Busch InBev retains a 50% stake in the maker of lagers Corona, Modelo and Pacifico.
Goldman's participation in the Blackstone purchase isn't its only private equity-related deal of late. The investment bank also tapped into the middle-market deal spectrum when it arranged $330 million in financing for the $673 million acquisition of Parsippany, N.J.'s GenTek Inc. by New York's American Securities earlier this month.
GenTek's purchase eclipsed the typical third-quarter deal size of less than $50 million, as the latest report from private equity data provider PitchBook Data indicated.
Anheuser-Busch InBev will receive $2.3 billion in cash as well as $400 million in potential earnout payments from the sale of 10 entertainment parks in connection with Blackstone's return on investment.
Simpson Thacher & Bartlett attorneys Wilson Neely, Lori Lesser, J. Alden Millard, Gary Mandel, Gregory Grogan and Joseph Tringali are serving as lead counsel to Blackstone.
JPMorgan and Lazard are acting as advisors to Anheuser-Busch InBev, which is using Sullivan & Cromwell for legal advice.
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