Roche Holding AG sold investment-grade debt in the US corporate bond market on Monday to help fund its acquisition of Telavant Holdings Inc.
The Swiss pharmaceutical giant marketed the $5.5 billion deal in five parts, with pricing on the longest-dated portion — a 10-year note — yielding 95 basis points over the benchmark rate, after initial discussions of 115 to 120 basis points, according to a person familiar with the matter.
The company earmarked the sale proceeds for general corporate purposes, including to fund a portion of its Telavant acquisition, as well as refinancing, dividend payments and potential early redemptions, the person said, asking not to be identified as the details are private.
A spokesperson for Roche didn’t reply to a request for comment.
In October, Roche said it would pay $7.1 billion to acquire Telavant, a developer of a promising therapy for treating inflammatory bowel disease, from Roivant Sciences Ltd. and Pfizer Inc. The deal would mark the company’s biggest acquisition since buying InterMune Inc. in 2014. Roche has faced pressure lately to build up its pipeline with medicines that can be commercialized as soon as a windfall of revenue from products used in the Covid-19 pandemic comes to an end.
The company delivered disappointing earnings last month, reporting declining quarterly revenue and a reiterated outlook. Roche expects sales to drop in the low single-digit range at constant exchange rates this year, with core earnings per share falling in line with revenue. Sales of Covid products will fall by about 4.5 billion Swiss francs ($5 billion), about 500 million francs less than previously expected.
Wall Street syndicate desks expect about $40 billion of sales in the US high-grade bond market this week, according to an informal survey of debt underwriters. So far this month, around $5.55 billion has been issued, against estimates calling for about $100 billion.
