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FX deal-contingent hedging for a European corporate
Success stories

FX deal-contingent hedging for a European corporate

Background
  • European corporate with a large EURUSD exposure linked to a cross boarder acquisition (US target)
  • Due to a large currency mismatch between sources and uses, the company had a significant FX risk from signing to closing (several months)
  • Deal is subject to several customary conditions (antitrust and others)
Our Approach
  • Structure a Deal Contingent FX forward with a ratchet mechanism to accommodate a large range of potential closing dates
  • Conduct an independent assessment of the contingencies and pricing associated
  • Introduce new banks outside of the M&A and/or financing banks
  • Assist with the due diligence process, on-boarding, KYC and trade confirmations review/negotiations
  • Conduct an auction process with selected banks and assist with live implementation
Benefits
  • A cost efficient solution that does not lead to break cost in case the transaction doesn’t close
  • Highly attractive pricing outcome similar to private-to-private transactions as a result of an efficient due diligence process and the introduction of additional banks known for their Deal Contingent capabilities
  • Very favourable legal terms negotiated in the trade documentation
  • Significant time, money and personnel resource savings for the client due to an efficiently run implementation process
 

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