S&P puts Publicis on watch

S&P said it placed all of the ratings on Publicis Groupe SA on CreditWatch with negative implications, including BBB+ long-term and A-2 short-term issuer credit ratings.

Publicis plans to acquire digital marketing agency Epsilon for $4.4 billion, S&P said, and finance the transaction through cash on its balance sheet and debt issuance.

As a result, S&P said it expects Publicis' debt-to-EBITDA ratio to increase to 2.5x to 3x, which is higher than 2x threshold for the current rating.

The agency also said it has some concerns regarding the combined group's future growth, as well as Epsilon's integration given Publicis's track record.

The CreditWatch will be resolved following the transaction's close and after an assessment pf Publicis' ability and willingness to reduce its leverage to less than 2x within two years and to resume with organic growth, S&P said.

The agency said it understands Publicis will finance the transaction with a combination of cash on the balance sheet and debt issuance.

The company expects the acquisition to close in the third quarter of 2019, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.