Merckle Drug Wholesaler Phoenix Said to Be Near $4.4 Billion Funding Deal

The Phoenix Group headquarters stand in Mannheim, German. Photographer: Hannelore Foerster/Bloomberg

Phoenix Group, the indebted drug wholesaler started by deceased billionaire Adolf Merckle, is close to obtaining as much as 3.6 billion euros ($4.4 billion) in financing, said two people familiar with the negotiations.

Phoenix, based in Mannheim, Germany, may reach an agreement with banks by early next month on 2.6 billion euros in syndicated loans to refinance existing debt, said the people, who spoke on condition of anonymity. The company also has plans to sell as much as 1 billion euros in hybrid bonds, according to these people.

The deal marks the final chapter in the downfall of Merckle, who committed suicide in January 2009 after wrong-way bets on the stock market that brought companies spanning the cement and drug industries to the brink of collapse. His death left son and sole heir, Ludwig, to negotiate new loans with the family’s lenders and divest assets.

A spokesman for Phoenix, Olaf Teichert, couldn’t be immediately reached for comment by phone or by e-mail. Ludwig Merckle’s spokeswoman couldn’t immediately comment.

Merckle agreed to sell generic-drug maker Ratiopharm GmbH to Teva Pharmaceutical Industries Ltd. in March for 3.63 billion euros. He also sold part of his stake in HeidelbergCement AG and Swiss drugmaker Mepha Gruppe in the last 12 months.

As part of the refinancing plan, Ludwig Merckle agreed to inject 500 million euros in cash and repay a loan to Phoenix, they said. Merckle’s VEM Vermoegensverwaltung GmbH investment vehicle borrowed as much as 500 million euros from Phoenix as the family patriarch sought to stem his losses, the people said.

The refinancing is aimed at bolstering Phoenix’s credit standing as it considers selling as much as 25 percent of Phoenix in an initial public offering in the next year, one of the people said. Phoenix may also sell smaller assets valued at less than 200 million euros, the other person said.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; To contact the reporter on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net;