Private equity firms Clayton, Dubilier & Rice and TPG are pursuing Blue Owl Capital to secure $2.5 billion in debt financing for their acquisition of veterinary healthcare company Covetrus. The move underscores growing demand for alternative credit solutions in large-scale private equity transactions.
- CD&R and TPG are seeking $2.5 billion in debt financing from Blue Owl Capital for Covetrus acquisition
- Deal includes senior secured loans and mezzanine debt components
- Blue Owl Capital is increasingly active in private equity-backed credit structures
- Covetrus serves North American and European markets with digital health platforms
- Transaction highlights rising reliance on alternative lenders amid tighter bank credit
- Acquisition adds to CD&R and TPG’s healthcare infrastructure holdings
Clayton, Dubilier & Rice (CD&R) and TPG are negotiating a $2.5 billion debt facility with Blue Owl Capital to support their leveraged buyout of Covetrus, a leading provider of animal health products and services. The transaction marks one of the largest private equity-backed debt deals in the healthcare sector this year, highlighting increased reliance on specialized credit providers amid tightening traditional lending conditions. The $2.5 billion financing package is expected to include a mix of senior secured loans and mezzanine debt, structured to align with the complex capital requirements of a mid-market LBO in the healthcare space. Blue Owl’s involvement reflects its expanding role beyond traditional asset management into direct lending and structured finance for private equity sponsors. Covetrus, which operates across North America and Europe, has seen steady revenue growth driven by digital platform adoption and expanded service offerings. The acquisition, if completed, would consolidate CD&R and TPG’s portfolio in the healthcare infrastructure segment, building on their prior investments in related sectors. Market participants note that the deal signals confidence in the long-term stability of the animal health market, despite macroeconomic headwinds. However, the use of high-yield debt instruments may raise concerns about leverage levels, especially if interest rates remain elevated beyond 2026.