North America Loan: Comcast's US$39bn acquisition financing

IFR Awards 2018
3 min read
Lynn Adler

After a long and twisty M&A road, including a duel with a mouse, US cable company Comcast took control of British pay-TV company Sky in October, and the £30.6bn cross-border deal was backed by one of the largest and most intricate investment-grade loan packages of the year.

Comcast won Sky after a heated competition with Rupert Murdoch’s Twenty-First Century Fox, shifting full attention to its quest for the company after dropping another high-profile battle, with Walt Disney, to buy most of Fox’s media assets.

Disney had won the media assets, before Comcast engaged in a bidding war that it ultimately ended in July in favour of sweeping up Sky. Comcast’s bid for the Fox media assets, at US$66bn, would have been the largest all-cash merger ever.

By buying a controlling interest in Sky, one of Europe’s biggest media companies, Comcast is boosting its entertainment, distribution and technology leadership, expanding its international footprint to better compete.

“In many ways this deal defined the market in terms of what lenders were looking for in terms of enhanced relationship returns, and it played off the cross-border M&A theme, and that generates loans and opportunities not just for US-based banks but also European banks as well as large international institutions,” said a banker involved in the financing.

Comcast ultimately backed its Sky acquisition with US$39bn-equivalent of loans, announcing the financing in September.

The deal comprised a £12.9bn 364-day bridge loan, £7bn of term loans – including a £3bn three-year term loan and a £4bn five-year term loan – a US$6bn four-year term loan and a US$7.611bn revolving credit facility.

Comcast had initially bid £22bn for Sky in February, with a £23bn loan financing that included a 364-day unsecured bridge loan of up to £16bn and £7bn of term loans, via lead banks Bank of America Merrill Lynch and Wells Fargo.

When the bid was raised in July to £25.9bn, the increase was funded by Comcast’s existing US$7bn revolving credit facility that was arranged in May 2016 by JP Morgan as administrative agent and joint lead arranger, and joint bookrunner along with Citigroup, Morgan Stanley, MUFG, Wells Fargo and Mizuho.

The revolver can be hiked up to US$10bn, is due in May 2021, and can be extended until May 2023.

In August, Comcast put the new US$6bn four-year term loan in place, repaying £3.1bn of April’s £16bn bridge loan via BAML and Wells Fargo.

By early October, Comcast had tapped the market for permanent financing, issuing US$27bn of bonds, looking to show the markets that it was following through with deleveraging plans. The 12-part bond deal drew nearly US$88bn in investor orders.

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