Research Update: HP Inc. 'BBB' Issuer Credit Rating Affirmed; Outlook Stable; New Notes Rated 'BBB'

U.S.-based personal computing and printer technologies company HP Inc. announced that it will acquire U.S.-based enterprise communications and collaboration solutions provider Plantronics Inc. (Poly) for $3.3 billion in cash. Management expects to close the transaction by the end of 2022. We expect the cash use and debt funding will increase pro forma adjusted leverage (excluding management expected synergies) to about 1.3x from about 0.9x as of Jan. 31, 2022. We forecast adjusted leverage to rise further to the mid-1x area in fiscal 2023 as we expect retained cash flow to be negative because of continued share repurchases, and incremental debt raise, though remaining below our downside threshold of 2x. We affirmed all our ratings including our 'BBB' issuer credit rating

...- U.S.-based personal computing and printer technologies company HP Inc. announced that it will acquire U.S.-based enterprise communications and collaboration solutions provider Plantronics Inc. (Poly) for $3.3 billion in cash. Management expects to close the transaction by the end of 2022. - We expect the cash use and debt funding will increase pro forma adjusted leverage (excluding management expected synergies) to about 1.3x from about 0.9x as of Jan. 31, 2022. We forecast adjusted leverage to rise further to the mid-1x area in fiscal 2023 as we expect retained cash flow to be negative because of continued share repurchases, and incremental debt raise, though remaining below our downside threshold of 2x. - We affirmed all our ratings including our '###' issuer credit rating on HP. At the same time, we assigned our '###' issue-level rating to the company's proposed unsecured notes offering. - The stable outlook reflects our expectation for HP to manage successfully current supply chain...

Research Update