Research Update: CD&R Firefly 4 (Motor Fuel Group) Rating Outlook Revised To Stable On Proposed Asset Purchase; ?B? Ratings Affirmed

Motor Fuel Group (MFG), the U.K.'s largest independent forecourt operator, plans to raise £1.6 billion in debt to acquire Morrisons' fuel forecourts. MFG has also secured £650 million of preferred equity from its sponsor, Clayton, Dubilier,&Rice (CD&R), that we regard as debt and, as part of this transaction, Morrisons will receive about a 20% stake in the enlarged MFG. The acquisition will strengthen MFG's leadership position in the U.K.'s fuel forecourt market, since the enlarged entity will operate 1,200 sites, selling 19% of the U.K.'s fuel volume; it will also grant MFG access to additional land, enabling the company to expand its electric vehicle (EV) charging infrastructure rollout. Pro forma the acquisition, we estimate that MFG's S&P Global

...- Motor Fuel Group (MFG), the U.K.'s largest independent forecourt operator, plans to raise ú1.6 billion in debt to acquire Morrisons' fuel forecourts. MFG has also secured ú650 million of preferred equity from its sponsor, Clayton, Dubilier, & Rice (CD&R), that we regard as debt and, as part of this transaction, Morrisons will receive about a 20% stake in the enlarged MFG. - The acquisition will strengthen MFG's leadership position in the U.K.'s fuel forecourt market, since the enlarged entity will operate 1,200 sites, selling 19% of the U.K.'s fuel volume; it will also grant MFG access to additional land, enabling the company to expand its electric vehicle (EV) charging infrastructure rollout. - Pro forma the acquisition, we estimate that MFG's S&P Global Ratings-adjusted EBITDA will increase to ú560 million in 2024 and ú625 million-ú650 million in 2025, from an estimated ú425 million-ú430 million for 2023. - This transaction will increase our adjusted debt-to-EBITDA ratio to 7.4x (6.2x...

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