Bankers prepares USD 2.3b debt for dsm-firmenich ANH business

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Bankers are willing to lend up to USD 2.3 billion for dsm-firmenich’s animal nutrition and health (ANH) business, as the sale process draws closer to a conclusion, according to a Bloomberg report.

Final bids for the business are expected this August, according to people familiar with the matter, who asked not to be identified because the talks are private.

Bankers are working out how much debt could be made available to back a bid, they added.

Financings for the business average between USD 1.7-2.3 billion, or around five times debt to earnings, the people said.

Bankers are working off earnings before interest, taxes, depreciation and amortization of around USD 462 million but this figure could vary significantly depending on how they calculate the different aspects of the business, they added.

While parts of the operation are highly regarded, others, such as the vitamins division, are seen as more problematic, the people said.

After a prolonged lull in M&A activity, bankers are eager to underwrite new financing deals, which offer some of the most lucrative fees in investment banking.

The few buyout debt packages that have recently hit the market have attracted strong investor demand for term loans — one of the few remaining havens for deploying cash.

CVC Capital Partners is widely seen as a frontrunner for dsm-firmenich’s ANH business, as they have an existing joint venture with the parent company, some of the people said, adding that they expect dsm-firmenich to retain a stake in the business.

Apollo Global Management Inc and Nutreco NV are some of the other players to have expressed an interest in the business, the people added.

Spokespeople for dsm-firmenich, Apollo and CVC declined to comment. A representative for Nutreco didn’t immediately respond to a request for comment.

However, bankers are still cautious when it comes to risk and keen to make sure they underwrite at a level that is manageable.

Amsterdam-listed dsm-firmenich said last year it planned to carve out the ANH business in 2025. It is working with UBS Group and Piper Sandler Cos to gauge interest in its ANH business.