A merger between two coffee giants is expected to be funded by at least $10 billion in debt financing, according to a person familiar with the matter.
The companies – DE Master Blenders 1753 BV, owner of the Douwe Egberts brand, and Mondelez International Incx MDLZ,
— said this week that they were planning a merger.
Funding will primarily be raised from leveraged loans, the person said, with a deal likely to hit the market later this month.
As part of the planned merger, Mondelez will spin off its coffee brands in exchange for $5 billion in cash and a 49% stake in the new company, which will be called Jacobs Douwe Egberts.
The loans will also be used in part to refinance existing debt on DE Master Blenders’ balance sheet, the person said.
The debt package will be one of the largest leveraged financing deals since the global financial crisis and comes less than a month after European telecommunications company Altice SA and its subsidiary Numericable Group SA raised nearly 16 billion euros ($22 billion) in debt financing to help fund Altice. acquisition of the SFR telecom unit of Vivendi SA.
An expanded version of this report appears on WSJ.com.
More must-read from MarketWatch:
The stock market is poised to fall like it did in 2012
The drop in small caps reflects a struggling market