Loblaw to Back Shoppers Drug Mart Deal With $5.1 Billion of DebtChristine Idzelis
Loblaw Cos., Canada’s largest supermarket company by market value, plans to finance its purchase of Shoppers Drug Mart Corp. with $5.1 billion of loans.
The funding will consist of a $3.5 billion term portion and a $1.6 billion bridge loan that will be replaced primarily with unsecured notes, according to a statement today from the companies. Bank of America Corp. is providing the debt, they said.
Loblaw, based in Brampton, Ontario, agreed to buy Toronto-based Shoppers Drug Mart for C$12.4 billion ($11.9 billion) in the biggest takeover of a Canadian retailer.
Loblaw structured the financing to keep its investment-grade credit rating, according to the statement. The company is rated BBB by Standard & Poor’s.
Bridge loans usually mature in one year and are often used as backstops to bond offerings or longer-dated bank debt. In a term loan, money can’t be borrowed again once it’s repaid.