Such is the breadth of liquidity across global debt markets, the options to finance a new jumbo LBO are as mouth-watering as an “all you can eat buffet” at your favourite Michelin starred restaurant.
Electronic Arts $55 billion public-to-private takeover will be the largest LBO in history
Electronic Arts has agreed to a $55 billion LBO led by PIF from Saudi Arabia, Silver Lake and Affinity Partners. The deal has been welcomed in public equity markets, with shareholders offered a 25% premium based on $210 per share. Meanwhile, debt market players are salivating at the prospect of a genuine “first time” issuer in the leveraged credit markets to augment their portfolios.
JP Morgan fully committed $20 billion of credit facilities to underwrite EA’s public-to-private takeover, including $18 billion of term debt and $2 billion of working capital facilities.
With pro forma leverage expected around 7.5x EBITDA, sole underwriter JPM will be keen to syndicate the EA debt into the market before year-end… yes, they are happy to share that buffet!
Banks are understandably keen to sub-underwrite a portion of the EA debt for a role in the market take-out, along with a sprinkling of economics. Indeed, around $500 million in underwriting fees should provide an enticing amuse-bouche to awaken the palate of debt market participants.
With around $36 billion in equity providing an implied 65% cushion behind debt providers, the syndicate of bank lenders are expected to sit relatively comfortably as they confirm their orders.
The underwriting banks will look to distribute the debt package to leveraged loan and bond funds.
In the capital markets, leveraged loan and high yield portfolio managers have been comparing high scores on their favourite EA games, while analysts check the cash flow models can service the debt. Strong CLO issuance has supported institutional term loan appetite, while high yield bond spreads have continued to grind tighter as credit investors search for yield down the ratings spectrum.
Meanwhile, the largest global private credit funds may be sizing up their potential appetite to take down a considerable “Bertha twelve-layered cake” slice of the EA debt ahead of year-end. Private credit funds will aim for a quick turnaround at investment committee and join the queue.
Twelve layers of Bertha cake by Get Baked (get-baked.co.uk)
But what if the Electronic Arts $55 billion jumbo LBO doesn’t close? A contractual $1 billion break fee should provide appropriate incentive for the board to allow management to serve up that financing buffet!
What about dessert… anyone for ice cream?
Froneri was formed by PAI and Nestlé in 2016 through a joint venture between R&R Ice Cream with the Nestlé European ice cream business. Froneri has successfully expanded its offering of branded ice creams to become a global business with revenues over €5.5 billion. The outstanding success of Froneri has allowed PAI and Nestlé to structure a €4.37 billion shareholder payout – one of the largest dividend recaps in Europe.
Froneri’s recap was financed in the euro and dollar capital markets, with their ice creams securing €2.8 billion in term loans and €1.1 billion of bonds, supplemented by €540 million in cash.
Froneri (B1/BB-) 7-year Term Loan B priced €900 million at Euribor+275bp at par, alongside $2,215 million at SOFR+250bp at 99.75% of par. In the (not so high yield) bond market, Froneri priced €600 million Senior Secured Notes at 4.75% in EUR and $580 million at 6.00% in USD.
Following the dividend recap, PAI and Nestlé will be joined by Abu Dhabi Investment Authority as a significant minority equity investor in Froneri ice cream, under the new ownership structure. This will be arranged through one of the largest single-asset continuation vehicles in Europe.
As they say in Sopranos, food is important… as is your good health!
Europe’s largest buyout announced this year is the acquisition of STADA by CapVest with an enterprise value around €10 billion. STADA is a leading pan-European pharmaceutical company with strong market positions across consumer health, generics and specialty medicines. STADA products are sold in over 110 countries generating revenues over €4 billion. CapVest will acquire a majority stake at STADA, while Bain Capital and Cinven are to remain minority investors.
The acquisition of STADA by CapVest has been supported by €1.4 billion Holdco PIK committed by credit funds at GSAM, KKR, Arcmont and PSP.
STADA (B2/B/B+) also priced €1.15 billion 7-year Secured Floating Rate Notes at Euribor+325bp. The bond offering was oversubscribed and upsized from €550 million. STADA will apply the bond proceeds to refinance €400 million “non-portable” FRNs due 2030, along with €600 million FRNs due 2030 and to repay €150 million of RCF drawings.
STADA’s remaining debt – secured term loans, high yield bonds and RCF – will remain in place as CapVest makes use of a portability clause to avoid a change of control triggering debt repayment.
3i takes more Action!
Action, the pan-European discount retailer owned by 3i Group plc, has continued to generate impressive growth with 2025YTD sales of €10.9 billion +18% ahead of the same period last year and like-for-like sales growth of +6.5%. Action has added 207 new stores so far in 2025.
Action (Ba1/BB+) priced €490 million Term Loan B at Euribor+275bp alongside $1,300 million Term Loan B at SOFR+225bp at par. Proceeds from Action’s new term loans will fund a dividend to shareholders, representing the ninth dividend recap since 3i acquired Action back in 2011.
Action is the largest asset in the 3i portfolio by a distance and they have decided to buy more! 3i increased its Action share to 60.1% through a 2.2% purchase from GIC in exchange for 3i shares. At 30 June 2025, Action was valued by 3i using an LTM run-rate EBITDA of €2,431 million. Applying a multiple of 18.5x to 3i’s 60.1% Action stake implies an equity value of £20 billion. For comparison, 3i Group plc last reported their total investment portfolio value at £27.2 billion.
While the Electronic Arts transaction may attract front-page headlines, it’s worth noting that the $36 billion equity investment in EA is less than the implied $45 billion equity value in Action!
Leveraged Credit Markets Continue to Serve up Attractive Debt Packages
Despite risk factors around global trade tariffs, inflation, fiscal deficits, AI impact on employment, geo-politics and international conflicts… global leveraged credit markets have continued to serve up attractive debt packages including banks, loan funds, high yield bonds and private credit.
About Newbrook Capital Solutions
At Newbrook, we have been delighted to advise private equity and corporate clients to raise capital for LBOs, acquisitions, dividend recaps, refinancings, capex, exits, holdco PIK and fund finance. Clients and their portfolio companies rightly deserve plaudits for their remarkable achievements in generating returns for LP investors, partners, management teams, employees and their lenders. Thank you to all our clients, friends, advisors and colleagues working across the financing markets.