Acquisition Bridge FinancingBridge financing acquisition
AbbVie's deals embody the US credit markets in a year marked by merger and acquisition activity - particularly in a health care industry that has never ceased to bring large buyout deals to roll. Through its credit cooperative with MUFG, Morgan Stanley acquired the USD 18 billion 364 day old bridge, which AbbVie provided with financing security when it promised the acquisition in March.
The Morgan Stanley pledged USD 14.25 billion and the MUFG USD 3.75 billion. Morgan Stanley's bridge was the company's largest individual promise in 2015. The credit cooperative enabled Morgan Stanley and MUFG to quickly and confidentially build the bridge within a few working day and ensure that there were no leakages ahead of the announced date.
This was the prelude to a range of health care related jump and M&A loans and also gave optimism to the investment-grade credit front earlier this year. This showed that the fixed income and syndications industries would be susceptible to banks," said Anish Shah, director of Morgan Stanley's investment-grade commercial bonds and acquisition financing group.
"It confirmed the fabric of the investment-grade bridge loan," he said. With the bridge facility, which funded a cash/share acquisition in conjunction with an expedited buy-back, AbbVie was able to meet the seller's preferred option to reduce shareholders' interest water. Acquisition financing and buy-back financing were also stopped. With a 100% success ratio, the deal was signed with AbbVie customer bankers.
AbbVie was also set up in less than two week to make sure that it has the best position to gain a very competetive M&A business. In parallel to syndicating the bridge, Morgan Stanley also amended AbbVie's current loan facilities to maintain the degree of liquidity of the commitments to support the deal.
The Broker's Manual: Bridge credits for mergers and acquisitions
The bridge will allow companies to benefit from significantly lower purchasing possibilities by having readily available resources. That is indispensable if you are waiting for longer-term financing or a ROI. Especially bridge credits for companies that merge are increasingly in great need due to the currently restricted possibilities for personal wellbeing.
Agents need to be conscious of the range of goods available to SME' in order to maintain their commercial model and promote long-term economic development. For companies, bridge financing offers an option to financing from risk capital providers that can often provide a prompt prediction of long-term revenues. Carl Graham, Executive Vice President at Bridgebank Capital, gave us an overview of how the project could help grow companies.
A further advantage of acquisition bridge is the possibility of providing a financing option to buy another company or extra asset that your customer has found lucrative. There is, however, a rising tendency for banks to initiate efficient buy-outs through bridge credits in an effort to try to diversify and attract new financing flows.
Not only can the capacity to anticipate large corporate expansion be of professional advantage to the banking professional, but it will also bring substantial cash reward as interim financing is very lucrative for the bank. Nevertheless, the acquisition financing outlook for small and medium-sized enterprises is promising.