The European primary market is set for a boost as Carlsberg (CABGY) and Johnson & Johnson (JNJ, Financial) prepare to issue substantial bonds to fund acquisitions. Carlsberg, the Danish brewer, aims to raise at least €2.3 billion ($2.4 billion) in euros and pounds to refinance a bridge loan for acquiring soft drink maker Britvic Plc. Meanwhile, Johnson & Johnson seeks to raise up to €4 billion to finance its $14.6 billion acquisition of biotech firm Intra-Cellular Therapies (ITCI). Recently, Johnson & Johnson also raised $5 billion in the U.S. market.
These transactions come amid a slow start for mergers and acquisitions this year. However, bankers anticipate a recovery in this sector will drive new bond issuances. The last major acquisition financing in the European bond market was in October of the previous year, when DSV A/S raised €5 billion for acquiring DB Schenker.
According to Bloomberg, global M&A transaction values have dropped by approximately 17% year-on-year to around $325 billion, attributed to valuation mismatches and concerns over U.S. trade tariffs. Strong demand from bond investors is compressing spreads, allowing companies to raise funds with minimal issuance premiums. Carlsberg's bonds have already attracted interest exceeding €6.5 billion before their official listing.
Johnson & Johnson, with an AAA rating, is issuing bonds with maturities of 4, 8, 12, 20, and 30 years. Both deals are expected to be priced later in the local day.
