Amazon's debt offering to fund Whole Foods acquisition includes 40-year bond

Seattle-based Amazon announced Friday it is buying Whole Foods in a $13.7 billion, all-cash offer.

Amazon.com announced Tuesday a private debt offering to fund its planned acquisition of Whole Foods Market.

The debt is set to price later Tuesday and will be broken into seven parts ranging from three-year notes to 40-year notes, analysts said.

Bank of America Merrill Lynch, Goldman Sachs and JPMorgan Chase are the lead underwriters of the deal, they said.

The release did not specify how much Amazon would raise. However, some analysts expected the debt offering to raise at least $15 billion, and Moody's on Monday assigned a Baa1 rating "to the company's proposed offering of up to $16 billion in senior unsecured notes." The ratings agency also changed Amazon's rating outlook to positive from stable.

"The change in outlook to positive reflects our view that despite the increase in debt, the Whole Foods acquisition is an immediate credit positive for the company on a variety of fronts," Moody's Vice President Charlie O'Shea said in a statement. O'Shea noted the deal gives Amazon "greater scale" and "crucial brick-and-mortar presence in a segment where it has been trying to grow."

Amazon did not immediately respond to a CNBC request for comment.

Jeff Bezos' e-commerce giant announced on June 16 it would acquire John Mackey's organic foods supermarket chain for $42 per share in an all-cash transaction valued at approximately $13.7 billion, including Whole Foods Market's net debt. The deal, Amazon's largest in its history, is expected to close by the end of the year.

In an 8-K filing with the Securities and Exchange Commission in June, Amazon said it expected to finance the deal with debt.

On Friday, S&P Global Ratings assigned an AA- rating to the proposed debt offering.

Amazon previously issued bonds in 2012 and 2014 and has $8.75 billion in outstanding debt, according to FactSet.

© 2017 KING-TV


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