Novartis AG has launched a multi-tranche US dollar bond offering through one of its units to finance the $12 billion acquisition of Avidity Biosciences Inc. According to a company filing, the issuance consists of eight separate tranches with maturities that range from three years up to 30 years.
The company intends to use the net proceeds from the sale to repay a bridge loan dated Feb. 26 that had been taken out to fund the takeover. The bridge facility provided near-term financing for the deal while Novartis arranged longer-term funding through the bond market.
Initial price indications for the longest-dated tranche - a note maturing in 2056 - were reported at roughly 1.2 percentage points over Treasuries, according to a market report. Those initial spreads represent early guidance for investors and dealers as the transaction is marketed.
Global banks acting as joint bookrunners and managers on the sale include BNP Paribas SA, Citigroup Inc, Deutsche Bank AG, JPMorgan Chase & Co and Mizuho Financial Group Inc.
Novartis agreed to acquire Avidity in October as part of a strategy to concentrate on innovative medicines across core therapeutic areas. The company said the purchase supports priorities including treatments for heart, kidney and metabolic diseases, as well as immunology, neuroscience and oncology. The transaction closed last month.
Context and mechanics
The bond program is structured as an investment-grade dollar offering split into eight maturities, enabling Novartis to stagger liability across short, medium and long durations. By channeling proceeds to repay the Feb. 26 bridge loan, the company is replacing short-term acquisition financing with longer-term public debt.
What the documentation shows
The company filing that announced the offering sets out the tranche structure and confirms the use of proceeds. Reported initial price talk for the 2056 tranche provides an early market reference point but does not represent final terms.
Summary
Novartis is marketing an eight-tranche, investment-grade US dollar bond offering to repay a bridge loan taken to finance its $12 billion acquisition of Avidity Biosciences. The longest tenor has been initially priced at about 1.2 percentage points over Treasuries, and five global banks are managing the sale. The acquisition, agreed in October, closed last month and aligns with Novartis' focus on core innovative drug areas.