Blackstone, Emerson Electric strike $14bn buyout deal

According to the Wall Street Journal, the deal – expected to be announced on Monday – would give Blackstone a 55% stake in the unit, which sells compressors and other HVAC products and services used in commercial and residential heating and cooling as well as cold storage. Emerson would retain a 45% stake.

It was understood that Blackstone and its co-investors would contribute $4.4bn in equity towards the deal, which would be supplemented by $5.5bn of debt financing. Equity that Emerson is rolling over along with a $2.25 billion seller note would account for the remainder of the price tag.

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In a typical market, banks would provide the debt financing, carving it up and selling it off to a number of buyers. Banks currently aren’t offering such so-called syndicated financing, however, the WSJ explained, as they grapple with a glut of debt from big buyouts struck before the stock market tumbled earlier this year.

Instead, Blackstone had to place the debt itself, selling it off to an assortment of direct lenders and others in a process that took the better part of a month, executives from both companies told the WSJ.

It is a process the firm has undergone before during times of market illiquidity, most recently in the aftermath of the 2008-09 financial crisis, though never with a deal of this size.

Source: Investing.com

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