Merck’s European treasury group has been awarded the title of European Treasury Team of the Year. The award, given by the British Association of Corporate Treasurers (ACT), recognizes the team’s efforts in the creative way by which it structured a recent acquisition.
Merck KGaA “received this distinction for the pivotal role it played in the financing of the Sigma-Aldrich acquisition,” according to The Treasurer, ACT’s practitioner journal. The ACT says the $17 billion deal “was the largest corporate acquisition financing in Europe since the financial crisis in 2008.”
According to a presentation from Merck KGaA, the deal was 100% cash and debt financed, so no equity was involved. The treasury team secured bridge financing, with the final financing structure consisting of a mix of cash, bank loans and bonds. Key to the deal was Merck’s strong combined cash flows that were “available for rapid deleveraging.” The company was also able to maintain it investment-grade rating. The ACT says both the loan facility, which amounted to $15.6 billion and the ensuing €7 billion international bond market transaction, were used to repay part of the loan facility. This “rapid deleveraging” all happened amid a volatile market environment, the ACT adds.
The company is also being lauded for the “rapid integration of the Sigma-Aldrich treasury activities.” Merck says the deal should be “fully implemented in the third full year after closing” and that integration costs are expected to be around €400 million spread over those three years. The Merck European treasury team is led by Rando Bruns, who has been head of group treasury since 2007.