Vestar does laundry

JPMorgan, Lehman Brothers and GE Capital Markets are providing the debt financing to back Vestar Capital Partners‘ US$1.45bn purchase of Unilever’s laundry businesses based in the US, Canada and Puerto Rico.

Vestar is buying the assets through Huish Detergents, a detergent maker; the merged entity will be named Sun Products and have annual sales of more than US$2bn.

The deal reflects how the leveraged loan market is open for quality transactions. In that vein, Standard & Poor’s favoured the transaction, placing Huish’s Single B rating on review for possible upgrade.

The agency said the deal was likely to have the net effect of deleveraging Huish and providing greater financial stability by giving it additional brands and larger scale. Unilever’s businesses generated about US$1bn in revenues last year, in line with those of the whole of Huish.

The purchase price includes a US$1.075bn cash payment, US$375m face value of preferred shares and warrants for up to 2.5% of the new company.

This purchase has Vestar following the lead of many of its peer firms in using a portfolio company as a strategic buyer to make acquisitions in a market where the mere financial acquirer has lost its supremacy.

Oak Hill Capital, for example, is using portfolio company Local TV to buy eight television stations from News Corp. And in its capacity as a financial investor, Vestar bought out privately held Huish last year. Huish completed a US$975m credit facility through JPMorgan last year to fund the buyout.