Moody's lifts Thales view to stable

Moody's Investors Service said it affirmed Thales SA's A2 long-term senior unsecured ratings, along with its P-1 short-term ratings.

The outlook changed to stable from negative.

The outlook revision reflects an expectation that despite Thales' acquisition of Gemalto for an enterprise value of €5.6 billion, key credit metrics will not meaningfully deteriorate compared to previous expectations, Moody's said.

Given the size of the transaction and some less well-performing aspects of Gemalto's business, the agency said, there are some integration risks associated with the Gemalto acquisition.

But the acquisition itself is not overly complex and should accelerate Thales' digital strategy, transforming it into a world leader in digital security, Moody's said.

The transaction will be financed by a combination of debt and cash, which will lead to deterioration in the company's net adjusted leverage to about 2x from less than 1x, the agency said.

The company's credit metrics will continue to strengthen over the next 12- to 18-months given the company's strong operating performance to date and the continued generation of positive free cash flow, Moody's said.

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