Banks to Hold $750M for Patterson’s $4.1B Buyout by Patient Square

Banks including UBS and Citi plan to hold $750 million of a debt financing Patterson Cos.’ buyout by Patient Square Capital that was relaunched last week after it struggled to gain investor participation in April amid tariff-induced volatility, according to sources.

The $750 million debt will be held on banks’ balance sheets for a 90-day lockup period, according to sources. The decision for banks to hold a portion of the debt comes after Patterson relaunched its loan and bond financing package last week with wider pricing, Octus reported.

The deal financing Patient Square’s $4.1 billion buyout of the pet care company consists of a $500 million senior secured note being led by Citi along with a $1 billion leveraged loan led by UBS. Initial price thoughts on the bond are coming at an 8.75% yield and 90-92 OID, while the loan is being offered in the high 80s to 90 OID at its SOFR+450-bps margin.

Patterson’s bond was downsized from $1 billion, and the loan was downsized from $1.35 billion as part of the relaunch. In April, the buyout financing struggled to gain investor participation as it launched in the midst of President Trump’s “Liberation Day” announcement, Octus reported. Patterson’s initial $1.35 billion loan was officially pulled from the market by UBS in June, Octus additionally reported.

Multiple investors said that Patterson’s downsized loan and bond books were covered this week, with one investor noting that the bond launched with $500 million in reverse interest last week. Proceeds from the pet and veterinary care company’s offering will replace a $500 million secured bridge facility and support the buyout. Commitments on the bond are due July 24.

Wells Fargo, Barclays, Morgan Stanley, Deutsche Bank, Jefferies, Truist, MUFG and U.S. Bank are bookrunners on the deal.

Octus’ covenants team noted in its analysis of Patterson’s deal that the relaunched notes omit certain aggressive terms included in the April offering. The prior offering included a 200% contribution debt basket and an unusually aggressive step-down to proceeds required to be applied under the asset sale covenant, and allowed an uncapped pro forma EBITDA adjustment for projected cost savings and synergies.

In December 2024, Nasdaq-traded Patterson announced that it would be acquired by Patient Square Capital for $31.35 per share in cash, or $4.1 billion, according to a press release. The transaction was to be financed through a combination of committed equity financing provided by Patient Square Equity Partners LP as well as committed debt financing to be led by Citi, UBS Investment Bank and Wells Fargo Bank NA, according to the release. The deal closed on April 22, according to another press release.

Moody’s Ratings assigned a B2 rating to Patterson and a B2 rating to the loan. The ratings agency said the B2 corporate rating is based on “the company’s solid position as a leading distributor of products to the dental and animal health markets.” Additionally, the ratings agency said Patterson’s leverage is 6.3x.

Citi, UBS and Patient Square Capital declined to comment. Patterson did not respond to a request for comment.