(Bloomberg) – Morgan Stanley is no longer involved in KKR&Co, according to people familiar with the matter. Buy financing from Swedish consumer health company Karo Healthcare.
Morgan Stanley advised Karo owner EQT AB and partnered with Jefferies Financial Group Inc. to provide potential bidders with about 1.1 billion euros ($1.2 billion) in staple food financing.
Staple food financing is pre-arranged funds used to facilitate acquisitions. While it doesn’t guarantee that the bank won the deal, as others can offer better pricing and terms, they often use staples and lenders that offer it to be often involved in the final coverage.
Jefferies, who is also an EQT advisor, is still involved in financing with several other banks, said that because the information is private, people who do not agree with it.
Representatives for Morgan Stanley, Jefferies and KKR declined to comment. EQT did not respond to a request for comment.
Banks are cautious about risk taking as US President Donald Trump’s tariff regime subverts the market. Wall Street lenders are desperate to avoid being unable to withdraw underwriting loans from their balance sheets by the end of the acquisition, which happened three years ago, when Russia invaded Ukraine’s sour credit market.
The company’s debt sales stopped in the United States, while borrowers, including flooring company Tarkett, are getting deals in the European leveraged financing market.
Read: Trade war paralyzed credit markets, put debt transactions on ice
According to people familiar with the matter, while the outlook for major markets looks grim, the plan is the debt behind KKR’s acquisition of KARO to private credit companies.
A similar situation occurred during the deal concluded by KKR, which acquired Spanish fertility clinic Iverma Global in 2022. At that time, banks including Morgan Stanley and Credit transferred €800 million in loan obligations to support private credit companies after rising inflation surged a series of fast-rate hikes.
Typically, when banks underwriting transactions, they then transfer their debt to the combined leveraged loan market, where mortgage obligations are the primary buyers.
Bloomberg reported that KKR is acquiring Karo in a deal that values the Stockholm-based company, which is worth more than 2.5 billion euros. The deals and financing this week violated market turmoil. KKR said in a statement that Carlo “operates in a resilient, growing field.”
According to its website, Karo has about 460 employees and its products are sold in more than 90 countries. The company owns the E45 dermatology brand and also sells products for coughs and colds as well as vitamins.
Citigroup Inc. serves as financial advisor to KKR.
– Assistance by Silas Brown.
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