Blackstone, the world’s largest private equity firm, has turned to direct lenders to help finance its $2.3bn acquisition of Rover Group, the world’s largest online marketplace for pet care, with the firm seeking about $250m of private debt, according to a report by Bloomberg.
The report cites unnamed sources with knowledge of the matter as revealing that Blackstone is targeting a loan that would pay interest of about 475 basis points over the Secured Overnight Financing Rate which, if successful, would make it one of the cheapest private credit deals on record, according to data compiled by Bloomberg. Some lenders have pushed for a higher price, however.
Blackstone’s acquisition may leave Rover with a debt-to-earnings ratio of about four times. Debt-fuelled buyouts typically leave a company with a debt pile of six times their earnings or more.
According to the report, company filings reveal that Blackstone’s $2.3bn acquisition cost is about 10 times Rover’s expected 2023 revenue. The $250m loan sought by Blackstone is relatively small compared to other leveraged buyouts.
The acquisition is expected to close in the first quarter of 2024, according to a November statement.
