S&P changes Resideo view to negative, rates loan BB+

S&P said it revised its outlook on Resideo Technologies Inc. to negative from stable and affirmed all ratings, including the BB+ issuer credit rating.

S&P also assigned a BB+ issue-level rating to Resideo's $600 million term loan B. The recovery rating is 4, indicating an expectation for average (30%-50%; rounded estimate 30%) recovery for lenders in a payment default.

Resideo announced an agreement to acquire Snap One Holdings Corp., a vertically integrated distributor and manufacturer of audiovisual and networking products for integrators and small businesses, for a total transaction value of $1.4 billion, including the repayment of Snap One's debt. Resideo plans to fund the acquisition with a new $600 million term loan B, a $500 million preferred equity investment, and balance sheet cash.

“The negative outlook reflects our forecast for acquisition spend to drive S&P Global Ratings-adjusted leverage to the mid-3x area in 2024, well above our 3x downside threshold, and that it may remain above 3x through 2025,” S&P said in a news release.

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