Moody’s changes Bertelsmann view to negative

Moody’s Investors Service said it changed to negative from stable the outlook on the ratings of Bertelsmann SE & Co. KGaA. Concurrently, Moody’s affirmed the company’s Baa1 long-term issuer rating, the Baa1 senior unsecured ratings and the Baa3 junior subordinated notes rating.

The rating action follows Bertelsmann’s announcement of the proposed acquisition from Pearson plc of the remaining 25% stake in Penguin Random House it did not already own for $675 million, equivalent to an estimated EV/EBITDA multiple of around 6.5x. The company plans to fund this acquisition with a mix of liquidity and short-term financing. The transaction is subject to regulatory approvals and is expected to close in the second quarter.

“Our decision to change the outlook on Bertelsmann’s ratings to negative reflects the modest deterioration in leverage following the acquisition, considering that the company was already weakly positioned in the Baa1 rating for some time. Bertelsmann’s credit metrics leave no headroom for operating underperformance or additional debt-financed acquisitions, at a time when the company needs to accelerate its transformation and address the structural challenges affecting its broadcasting business,” said Agustin Alberti, a Moody’s vice president, senior analyst and lead analyst for Bertelsmann, in a press release.

© 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.