Xylem raises $1.5 billion in debt offering to fund acquisition

Xylem Inc. (XYL) completed a public offering of $1.5 billion in senior unsecured notes, according to a regulatory filing on Monday. The company said the net proceeds will be used alongside cash on hand to finance the acquisition of the Cornell Pump and Roper Pump businesses, pay transaction costs, and fund general corporate purposes.

The debt offering consists of three tranches of $500 million each. The 5.250% senior notes due 2029 bear interest at 5.250% per year and mature on September 28, 2029, with interest payable semiannually on March 28 and September 28 starting March 28, 2027. The 5.450% senior notes due 2032 carry a 5.450% annual interest rate and mature on January 15, 2032. The 5.850% senior notes due 2037 bear interest at 5.850% per year and mature on January 15, 2037. Interest on the 2032 notes and 2037 notes is payable semiannually on January 15 and July 15 starting January 15, 2027.

The notes are senior unsecured obligations ranking equally with all other unsecured and unsubordinated obligations of the company. The offering was conducted pursuant to an underwriting agreement with Citigroup Global Markets Inc., ING Financial Markets LLC, J.P. Morgan Securities LLC, BNP Paribas Securities Corp., and Wells Fargo Securities, LLC acting as representatives for the underwriters.

The company is subject to a special mandatory redemption requirement if the acquisition is not consummated by the later of August 10, 2027, or an extended termination date under the equity purchase agreement, if the purchase agreement is terminated, or if the company decides to abandon the acquisition. In those events, the company must redeem all notes at a price equal to 101% of the aggregate principal amount plus accrued and unpaid interest.