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Market Volatility Is Now Starting to Disrupt Dealmaking

BofA Backed Out of Funding for Year’s Top U.K. Take-Private Deal

(Bloomberg) -- Bank of America Corp. backed out of financing the biggest take-private of a U.K. company this year, in a sign lenders are getting more wary of extending credit as market volatility surges, people familiar with the matter said.

The bank had been in talks to finance private equity firm Clayton Dubilier & Rice’s 400 million-pound ($525 million) buyout of public relations firm Huntsworth Plc, the people said. It pulled out in the final days leading up to last week’s deal announcement, after its credit committee refused to sign off on the transaction, the people said, asking not to be identified because the information is private.

Royal Bank of Canada jumped in and provided a $295 million term loan facility and 35 million-pound revolving credit facility to fund the transaction, according to a regulatory filing. Bank of America, RBC and boutique firm Houlihan Lokey Inc. advised CD&R on the purchase of Huntsworth, which owns agencies including Citigate Dewe Rogerson and Grayling.

Large Wall Street firms often win deal mandates by offering to provide loans for a deal, making it relatively unusual for them to advise on a transaction without committing funds from their balance sheet.

Bank of America worked on the biggest private equity buyout of a U.K. company last year, advising on Blackstone Group Inc.’s purchase of $6 billion theme-park operator Merlin Entertainments Plc. The lender also worked with Apax Partners and Warburg Pincus on their $3.4 billion acquisition of satellite operator Inmarsat Plc.

In both cases, the bank lent money to the buyer groups in addition to its advisory work. It also helped finance TDR Capital’s $2.4 billion purchase of U.K. online car seller BCA Marketplace Plc last year.

While Bank of America continues to lend for major transactions, it’s become more selective amid the market volatility, the people said. It’s still possible the firm will participate in the financing at a later stage, when the debt is syndicated out to a wider group of banks.

Representatives for Bank of America, CD&R and Huntsworth declined to comment.

To contact the reporters on this story: David Hellier in London at dhellier@bloomberg.net;Dinesh Nair in London at dnair5@bloomberg.net

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Amy Thomson

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