Moody's lowers Publicis view to negative

Moody's Investors Service said it changed Publicis Groupe SA's outlook to negative from stable.

The agency also affirmed the Baa2 issuer and instrument ratings on the senior unsecured notes issued by Publicis.

The outlook revision follows news of Publicis's proposed acquisition of Epsilon, a division of Alliance Data Systems, for $4.4 billion, Moody's said.

That is equivalent to an adjusted EBITDA multiple of about 10x, the agency said.

Publicis intends to finance the acquisition with debt and $650 million of cash on hand, Moody's said.

The decision to change the outlook reflects the increased leverage upon completion of the acquisition, such that Publicis will exceed its guidance for the Baa2 in 2019, the agency explained.

The negative outlook also considers the integration risks related to the largest acquisition ever realized by the company, leaving limited headroom for operational underperformance, Moody's said.

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