Morgan Stanley began marketing $2.3 billion of leveraged loans to help fund the $7.7 billion takeover of insurance broker Baldwin Insurance Group Inc. by Michael Dell’s family office and Sequence Holdings, testing a loan market that has slowed sharply this fall.
The package consists of a $2 billion seven-year term loan and a $300 million seven-year delayed-draw term loan that can be tapped later, according to people familiar with the deal. Early pricing talk is 3.5 percentage points over the floating-rate benchmark, with the term loan offered at 99 cents on the dollar. A lender meeting was held Tuesday and commitments are due Nov. 12. The financing also includes $750 million of second-lien secured debt that was placed privately.
The buyout
Dell’s DFO Management and Sequence, a holding company focused on applying AI to traditional businesses, agreed in mid-September to pay $32.50 a share in cash for Tampa, Fla.-based Baldwin, about 88% above its price in mid-June before talk of a deal surfaced. The price values the equity at about $4.6 billion and includes roughly $3.1 billion of net debt to be assumed or refinanced, about 20-fold Baldwin’s trailing adjusted Ebitda of roughly $396 million.
The buyers will form a new company that owns a majority of Baldwin, while some employee shareholders roll part of their stakes and keep a minority interest. Chief Executive Trevor Baldwin and co-founder Lowry Baldwin have agreed to vote for the deal and retain part of their holdings. The merger isn’t conditioned on financing and is expected to close in the first quarter of 2027, after which Baldwin’s shares will leave the Nasdaq.
A quiet loan market
The Baldwin loan is only the second leveraged loan to launch this week. Higher borrowing costs and uncertainty around the midterm elections have kept many issuers on the sidelines: junk-bond sales fell 18% from a year earlier in October to about $14.6 billion, and leveraged-loan volume was more than 10% below its year-earlier level.
