The Australian brewer of the county’s most popular Victoria Bitter (VB) beer, Foster’s Group, has seen its credit default swaps rise after British-South African brewer SAB Miller launched a hostile bid to takeover the company. As reported in Bloomberg,
Credit-default swaps on Foster’s bonds rose 39 basis points this month to 130 basis points, exceeding a gauge of global brewers for the first time since at least May 2009 when Bloomberg started compiling the data. Foster’s stock rose 2.2 percent above the offer price today, indicating SABMiller may have to raise its bid after taking the all-debt offer to the Melbourne-based company’s shareholders to bypass the board’s rejection…….
SABMiller, the London-based maker of Miller Lite, hired banks to raise $12.5 billion loans for the bid, a person with knowledge of the deal said last week. The financing, the largest for a European acquirer since Paris-based drugmaker Sanofi- Aventis obtained $15 billion in October to buy Genzyme Corp., is being sought as increased credit-market stress forces European banks to pay the most in a year to borrow in dollars.
Credit-default swaps on Foster’s debt have reached the highest since April 2009 and were above an index of food and beverage companies that includes Heineken NV and Carlsberg A/S for a sixth consecutive trading day yesterday, according to CMA prices and data compiled by Bloomberg…….
The cost of insuring the debt of SABMiller increased 44 basis points in August to 130 basis points, and touched 134.5 on Aug. 24, the highest since June 2009, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market. Credit-default swaps on food and beverage companies increased 27.7 basis points to 127.3 basis points in the period, Bloomberg data show……
To fund a takeover, SABMiller has agreed to pay interest of about 90 basis points more than the London interbank offered rate for a five-year portion of the financing, two people familiar with the situation said. The debt also consists of three-year term loans and a revolving credit line, the people said. The financing includes $8 billion of 18-month bridge loans to be refinanced with bonds, a person said.
The banks involved in helping to finance the Foster’s bid are:
JP Morgan Chase, Royal Bank of Scotland, Morgan Stanley, BBVA, Banco Santander, Barclays, Bank of America Merrill Lynch, Citigroup, Bank of Tokyo-Mitsubishi UFJ and Mizuho. 12 banks in total were asked to participate but BNP Paribas and Commerzbank had to decline.