Stonepeak’s USD 2.4bn deal to acquire Intrado's Safety business came together after weeks of bilateral talks, two sources familiar with the matter said, capping off a sale process that was earlier challenged by choppy credit markets.

Infrastructure investor Stonepeak this summer emerged as a frontrunner in negotiations to acquire Intrado’s larger Life & Safety business, but sources had told this news service in August that the auction was stalling as deteriorating market conditions made financing harder to come by.

Intrado’s owner, Apollo Global Management [NYSE:APO], had been seeking a price tag of over USD 3bn for the combined Life & Safety business, prompting Stonepeak to explore a debt package worth roughly USD 1.8bn.

In an effort to rejuvenate negotiations, dealmakers settled on carving out Intrado’s smaller Safety arm, which operates part of the national 911 call routing and data delivery network, according to the sources. Stonepeak felt the Safety business was more aligned with a digital infrastructure-type asset that it is accustomed to buying, one of them added.

One of the sources said Stonepeak plans to finance the deal with a combination of debt and equity, while the other said that the investment firm has indicated it aims to optimize Safety’s capital structure prior to the deal closing in 1Q23.

“Intrado’s market-leading safety business has experienced significant growth under our ownership, driven by investments in product development, strategic M&A and industry partnerships. We are confident the business will continue on its strong trajectory under the ownership of Stonepeak, which also brings substantial experience in the communications technology sector,” said Apollo Partner Robert Kalsow-Ramos.

The deal for Intrado Safety offers a glimpse at how buyers and sellers are prioritizing flexibility to get deals over the line while markets are under pressure. Stonepeak’s willingness to push ahead to find an agreement represents its conviction in both the business and its ability to formulate an optimal capital structure, even as Wall Street banks are tested in their capacity to offload risky leveraged buyout debt, one of the sources said.

Rising interest rates, surging inflation and fears of a recession have created “unprecedented conditions” for M&A, with large-cap dealmaking in particular held back as financiers look to temper their exposure to volatile leveraged bonds and loans.

RBC Capital Markets acted as the lead financial adviser to Intrado on the transaction. Intrado was also advised by LionTree. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as the legal adviser to Intrado on the transaction. Simpson Thacher & Bartlett served as the legal adviser to Stonepeak.

A representative for Stonepeak declined to comment. Intrado did not respond to requests for comment.