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Diamondback Energy (NASDAQ: FANG) has raised $5.5 billion from the investment-grade market to partially finance its $26 billion acquisition of Endeavor Energy Resources, Bloomberg reported Tuesday.
Diamondback (FANG) sold the bonds in five tranches, with the longest portion of the offering, a 40-year security, yielding 142 bps above US Treasuries, after initial discussions of ~170 bps, according to the report.
Proceeds from the offering will be used for general corporate purposes, including paying part of the cash consideration for the Endeavor merger and repaying certain debt of Endeavor if the merger closes, according to the report.
Diamondback's (FANG) outstanding debt would double to ~$13 billion if it closes the acquisition, but the cash flow generated throughout the year would limit the impact of leverage, with pro forma leverage expected to be ~1. 1x by year-end, CreditSights analysts say. .
In February, Diamondback (FANG) agreed to buy Endeavor in a $26 billion deal comprised of $8 billion in cash and 117.3 million shares.
