Goldman, Barclays Bust Into Jamie Dimon's Game

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12/06/2017 | 09:33 pm
Jamie Dimon

By Liz Hoffman

Jamie Dimon, take note: There are two new members of the $20 billion loan club.

Goldman Sachs Group Inc. and Barclays PLC each will lend $20 billion to back CVS Health Corp.'s takeover of Aetna Inc., according to a regulatory filing late Tuesday. That puts them into an exclusive club -- pretty much inhabited only by JPMorgan Chase & Co. -- of big banks able to write checks of that size.

Bank of America Corp. will raise the remaining $9 billion of the $49 billion in financing CVS needs for the $69 billion deal. The transaction will combine CVS's pharmacy heft with Aetna's insurance operation.

It is the fourth-largest package of takeover debt ever assembled, edging past the $46 billion raised to fund the 2008 takeover of Anheuser Busch, according to Dealogic. The CVS borrowing is the second-largest U.S. merger financing on record.

The financing is a coup for both Goldman, which is pushing to be more of a takeover lender, and Barclays, which under former JPMorgan executive Jes Staley is trying to remain a top-tier player in the mergers game. These are the largest checks either firm has written for such a deal.

Takeover loans provide temporary financing for deals, bridging the gap between when a transaction is signed to when permanent funding can be locked down, typically through a sale of bonds.

For CVS, that is likely to happen in the spring. Meanwhile, its lenders plan to sell up to half of their loans to a group of about 20 additional banks and began marketing the debt to investors this week, according to people familiar with the matter. It is expected to carry a low investment-grade rating.

J.P. Morgan, the largest U.S. bank by assets, has dominated the market for deal-related megaloans. The firm, run by Mr. Dimon, has gone into at least four deals for $20 billion or more: AT&T Inc.'s pending takeover of Time Warner Inc.; the telecom giant's 2011 pursuit of T-Mobile US Inc.; the 2014 failed tie-up of AbbVie and Shire PLC ; and the merger of drugmakers Actavis and Allergan a year later.

Goldman is trying to do more takeover lending. The firm is already a leading adviser in corporate M&A, but the real money in deals is often from raising and distributing the billions of dollars in bonds and loans needed to pull them off.

Last year, Goldman put a senior leveraged-finance banker in charge of the push. It is leading a $13.7 billion financing for Inc.'s takeover of Whole Foods Market Inc., and has also won debt assignments for mergers involving chip maker Qualcomm Inc., health-care services company Cardinal Health Inc. and laboratory supplier VWR Corp.

Barclays' relationship with CVS runs deep. It advised on the pharmacy chain's 2015 takeover of Omnicare Inc. and raised $13 billion solo for the effort.

Early merger talks between CVS and Aetna called for debt financing of about $40 billion, and both banks got internal approval for half of the amount, according to a person familiar with the matter. When CVS's stock stumbled this fall, the mix of consideration required more cash and Bank of America was brought in to close the gap.

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