S&P rates Prosus BBB-

S&P said it assigned a BBB- rating to Prosus NV and affirmed its BBB- rating on the company’s senior unsecured debt.

“We believe Prosus has furthered its acquisition and divestment strategy while maintaining substantial financial headroom. We consider Prosus’ portfolio rotation activities to be a critical indicator for assessing the group’s underlying credit quality. A number of Prosus’ investments are majority-owned businesses in which it acts as operator and investor. Prosus’ management sees this as a strength that enhances its ability to generate returns,” said S&P in a press release.

Prosus plans to buy Just Eat for £4.9 billion in cash with a bridging facility. The company would then refinance the facility within a year after the transaction’s completion, and the final financing structure would consider capital structure optimization, costs and prevailing market conditions. Given Prosus’ cash balance of about $7.7 billion and availability under its $2.5 billion revolver, the group will likely maintain financial metrics commensurate with the current rating. This leads to a LTV ratio lower than 15% and cash flow coverage of at least 2x, the agency said.

The outlook is positive.

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