Clayton Dubilier & Rice and TPG Inc. are negotiating with private credit firms like Blue Owl Capital to arrange at least $2.5 billion in financing for Covetrus. The veterinary practice technology company aims to refinance its existing $2 billion debt load and fund a potential acquisition, according to sources.

The deal would involve new debt and possibly fresh equity from CD&R and TPG to support the add-on buy. Private credit has become a major lender for mid-market buyouts, offering flexibility traditional banks often lack. This move shows private equity firms turning to specialized lenders for larger, complex financings.

Covetrus, formed from the merger of Henry Schein’s animal health unit and VETstock, has navigated a challenging market. The outcome hinges on final terms and market conditions. Investors will watch if this deal closes and what acquisition it might enable for the company’s growth strategy.