THE WALL STREET
Prepares Large Bond Sale For Alliance Boots Deal
Drugstore Chain to
Sell As Much As $10 Billion in Bonds As Early As This Week
Nov. 5, 2014 4:59
plans to sell as much as $10 billion in bonds as early as this
week. SPENCER PLATT
Walgreen Co. is expected to
begin selling as much as $10 billion in bonds in dollars, euros and
British pounds as early as this week, in a sale that would rank among
the largest corporate bond deals this year.
deal would add to this year’s deluge of corporate bond issuance, with
U.S. bond sales from highly rated companies like Walgreen expected to
be the highest on record this year. Walgreen would also become the
latest U.S. company to tap overseas debt markets, following
Apple Inc., which earlier this week
sold $3.5 billion of debt in euros, its first nondollar bond.
Executives from Walgreen and Alliance Boots were expected to hold
investor calls Tuesday and Wednesday. Goldman Sachs, Bank of America
Merrill Lynch and Deutsche Bank are helping to arrange the deal. A
spokesman for Walgreen declined to comment on the sale.
Investors say the bonds will likely be well received. Other companies
have tapped the debt market this week in what has already been a busy
few days, including American Express Co. and Noble Energy Inc.
“Given the size of the deal, I imagine they’ll probably come at a nice
concession,” said Matthew Duch, portfolio manager at Calvert
Investments, meaning the bonds will likely offer relatively high
yields compared with the company’s outstanding debt. Mr. Duch’s firm,
which oversees more than $13 billion, would be interested in
purchasing the bonds, he said.
month, Moody’s Investors Service downgraded Walgreen one notch to
Baa2, considered investment grade and two notches above junk. The
ratings agency said the company’s debt levels will increase from $4.5
billion to between $17 billion and $19 billion following the closing
of the Alliance Boots acquisition and a $3 billion share repurchase
Walgreen already owned a 45% stake in Alliance Boots, acquired in
2012, and announced in August that it was exercising an option to
purchase the remainder of the company. It said it would pay $5.3
billion in cash, and stock valued at about $10 billion, for the