Moody’s rates Publicis notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the proposed €2.25 billion senior unsecured notes, split in three tranches of €750 million each, due 2025, 2028, and 2031, to be issued by MMS USA Financing Inc., an indirectly 100% owned subsidiary of Publicis Groupe SA.

Publicis fully and unconditionally guarantees the notes.

The outlook is negative.

The proceeds will be used to refinance the $3.75 billion bridge loan raised to fund the acquisition of Epsilon announced in April 2019, Moody’s said.

The ratings reflect the company's strong position in advertising, communications and marketing services, broad product, geographical and industry diversification, defined strategy to improve the structure and strong free cash flow generation before acquisitions, dividends and share buybacks, the agency said.

The ratings also consider the recently announced acquisition of Epsilon for a gross purchase price of $4.4 billion, Moody’s explained.

The acquisition will have strategic benefits for Publicis because Epsilon is a strong complementary asset in its strategy to foster data-driven marketing and consulting services to clients, the agency said.

This acquisition will bring Moody's adjusted debt-to-EBITDA ratio to about 3.4x on completion of the deal, which is above the 3.25x threshold for the Baa2 rating category, Moody’s said.

The execution risk related to the largest acquisition ever realized by the company leaves limited room for underperformance, the agency said.

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