Johnson & Johnson borrowing $7.5 billion for Momenta in latest M&A bond sale | Mint
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Business News/ Companies / News/  Johnson & Johnson borrowing $7.5 billion for Momenta in latest M&A bond sale
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Johnson & Johnson borrowing $7.5 billion for Momenta in latest M&A bond sale

The drugmaker is the latest in a string of companies to seek funding for mergers and acquisitions

J&J is selling the debt in six parts (AP )Premium
J&J is selling the debt in six parts (AP )

Johnson & Johnson is tapping the bond market for $7.5 billion to help fund its acquisition of Momenta Pharmaceuticals Inc., adding to a week that’s seen a resurgence in financing for takeovers.

The drugmaker is the latest in a string of companies to seek funding for mergers and acquisitions, bringing even more supply to a high-grade market that’s closing in on a record month. Intercontinental Exchange Inc., Roper Technologies Inc. and a unit of KKR & Co. all brought bond sales in recent days to help fund M&A.

J&J is selling the debt in six parts, according to a person with knowledge of the matter. The longest portion, a 40-year security, will yield 110 basis points over Treasuries, after initially discussing around 125 basis points, the person said, asking not to be identified as the details are private.

The New Brunswick, New Jersey-based company is looking to fund a takeover worth $6.5 billion -- the biggest pharmaceutical deal this year -- which will build out its repertoire of autoimmune-disease drugs. The Momenta deal is the latest sign drug companies are looking for ways to bulk up even as the coronavirus pandemic upends other businesses.

The bond sale represents J&J’s first time in the market in almost three years. As one of the last companies standing with a perfect AAA credit rating, the offering has the chance to rival record-low yields set in recent transactions from Google parent Alphabet Inc. and Visa Inc.

While J&J should be able to pay down the debt, higher leverage will hurt its flexibility to handle potential talc and opioid-related litigation fees, according to Moody’s Investors Service. S&P Global Ratings said that J&J’s adjusted debt to a measure of earnings is already at a 15-year high.

JPMorgan Chase & Co. and Bank of America Corp. are managing the bond sale, the person said.

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Published: 20 Aug 2020, 11:55 PM IST
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