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Financing lined up for potential Idemia deal; Thales reportedly still interested

Goldman prepares $2.7B debt financing
Categories Biometrics News  |  Trade Notes
Financing lined up for potential Idemia deal; Thales reportedly still interested

It looks as if the private equity firm owning Idemia has teed up the biometrics and digital ID giant’s sale, arranging for a plain vanilla transaction in uncertain times.

According to confidential sources known only to financial news publisher Bloomberg, Advent International has hired U.S. investment bank Goldman Sachs Group is arranging a preplanned €550 million (US$580 million) sale of Idemia.

Goldman Sachs is building a €2.5 billion (US$2.7 billion) debt-only financing structure, according to Bloomberg reporting.

Financial news service Private Equity Wire described the debt as high-yield bonds and leveraged loans, both reflecting perceived heavy indebtedness by Idemia or a greater risk of default.

In a staple, sometimes called pre-agreed, deal, the investment bank takes on a great deal of risk.

Not only is it spending resources on a deal that may not transpire, but it will need to find buyers for the debt created in the buyout, which is not a sure thing right now.

A sale of the France-based company so far has lured interest from biometrics player Thales and a pair of investment firms: Apollo Global Management and Brookfield Asset Management, Bloomberg says. Advent has held Idemia since 2017.

Debt raised would equal 4.5 times Idemia’s earnings before interest, taxes, depreciation and amortization, or Ebitda. It has been more common recently to see deals like this pushed with a debt ratio of at least six percent.

Staple deals, as such structures are called, are completely orchestrated in advance. A would-be buyer knowns all the costs in advance, and while it is hard for a potential buyer to negotiate better terms for any facet of a buyout, it does not have to invest in building its own financing package.

One of the results is that more possible buyers come around kicking the target company’s tires.

Thales reportedly has been here before. According to Reuters reporting a year ago, Thales expressed interest in acquiring assets from Idemia in a sale that valued Idemia at €3 billion to €4 billion (at the time, US$3.4 billion to $4.6 billion).

Antitrust regulations would have limited which parts Thales could bid for. It had previously confirmed its interest in adding cybersecurity assets.

A hypothetical 2022 transaction would have been a typical facility, not a staple deal.

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