UK-based Element Materials agreed to a cash acquisition of Exova Group. HSBC, Bank of America Merrill Lynch, ING and Barclays have arranged and fully underwritten the $1.5 billion equivalent financing.

The financing comprises a $1.285 billion-equivalent first-lien loan and a $230 million eight-year second-lien loan. There is also $50 million of follow-on-funding in the form of unsecured notes.

“We are very excited about the potential of combining these two great businesses to better serve our customers and support their growth. This transaction will create a truly global product and materials testing business, increasing Element’s operational reach across key markets in U.S., Europe and Asia. The combined UK headquartered group will benefit from deep pools of technical talent, very significant testing capacity and a strong network of facilities to support our customers’ global supply chains,” said Charles Noall, CEO of Element, of the acquisition.

The first lien-loan comprises a $720 million seven-year term loan B, £160 million ($204 million) seven-year term loan B, €204.2 million ($264 million) seven-year term loan B, $100 million ($129 million) six-year revolving credit facility and a $50 million seven-year capital expenditure facility.

The dollar and euro term loans are guided to pay 350bp over LIBOB/Euribor if leverage is greater than 4.5 times; stepping down to 325bp over LIBOR/Euribor for leverage between 4.5 times-4.0 times and 300bp over LIBOR/Euribor when leverage falls below 4.0 times.

The sterling is offered at 450bp over LIBOR if leverage is greater than 4.5 times, stepping down to 425bp between 4.5 times-4.0 times and 400bp over LIBOR, if leverage is less than 4 times.

The revolving credit pays 325bp over base rate and the capex 350bp over base rate. Both step down by 25bp based on the same leveraged gradient as the first-lien. The second-lien is set to pay 750bp over LIBOR. The unsecured notes pay 12%.

Element is a global materials and product qualification testing provider with a strong focus on the aerospace, oil and gas and automotive end markets. Element is majority owned by BEV, the latest fund of Bridgepoint and was acquired by BEV in March 2016.

Edinburg-based Exova Group is a laboratory-based testing company.