BofA and JPMorgan line up about $2.4 billion in loans for CVC's IFF ingredients buy

Deal and financing basics

Bank of America and JPMorgan are preparing about $2.4 billion of financing to back CVC's acquisition of IFF's food ingredients unit. According to people familiar with the plan, the banks plan to kick off pre-marketing of roughly $2.4 billion in multi-currency leveraged loans to a limited set of investors, ahead of a broader syndication in the coming weeks.

JPMorgan will take point on selling down the euro tranche, and Bank of America will oversee the U.S. dollar portion, which could come to about $1.5 billion. The companies - JPMorgan, Bank of America and CVC - did not offer comment through their spokespeople. IFF's representative did not respond right away when asked for comment.

Why this deal, and why now

In May, CVC said it would acquire IFF's ingredients operations in a deal valuing the unit at $4.3 billion, with IFF retaining a 10% stake. The operation makes texturants, emulsifiers and additional additives used in food and beverages, broadening CVC's presence in specialty and clean-label categories. Together with Irca, its dessert and bakery ingredients supplier, CVC has positioned itself to serve customers across indulgence foods and more functional formulations.

This financing sits alongside several buyout debt packages that banks are preparing to sell as they look to lighten balance sheet exposure before year end. Banks also hold underwriting commitments for two more CVC deals: Irca and the animal nutrition and health unit of DSM-Firmenich AG.

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What investors should watch

Focus on pricing, currency mix and demand when the syndication opens. How the euro and dollar tranches split, and how quickly the roughly $2.4 billion clears, will signal appetite for cross-border leveraged loans while banks work through year end inventory. Execution here also offers a read on how efficiently sponsors like CVC can fund deals across their ingredients portfolio.

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