Reckitt Benckiser may issue $11 billion bonds for Mead Johnson buyout

By Susanna Moon

Chicago, Feb. 10 – Reckitt Benckiser Group plc may obtain $8 billion of bridge financing to cover the cash costs related to its planned acquisition of Mead Johnson Nutrition Co. for $16.6 billion.

Also, Reckitt Benckiser may need another $3 billion to refinance Mead Johnson bonds if required, according to a company announcement.

The company expects to refinance the bridge loans by issuing bonds “to reflect the expected cash flows of the combined group.”

Reckitt said it signed a merger agreement with Mead Johnson for $90 in cash per common share.

The acquisition will be financed through debt facilities with Bank of America Merrill Lynch, Deutsche Bank and HSBC, which also include $9 billion of term loans over three to five years as well as a £1 billion revolving credit facility for “financing headroom.”

The company said it is in talks with the rating agencies and expects to hold onto “a strong investment-grade credit rating.”

Reckitt Benckiser is a household cleaning, health and personal care company based in Slough, England.

Mead Johnson is a Glenview, Ill.-based pediatric nutrition company.

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