Research Update: Ireland-Headquartered ICON PLC Downgraded To 'BB+' On Debt-Funded Acquisition Of PRA Health Sciences; Outlook Stable

In February 2021, ICON PLC signed a definitive agreement to acquire PRA Health Sciences Inc. for about $12 billion. We expect the transaction will close in July 2021. ICON will finance the transaction with a mix of balance sheet cash, new debt instruments, and an equity issuance of about $5.7 billion. As part of this transaction, ICON will fully repay the existing debt facilities at ICON and PRA. We anticipate ICON's S&P Global Ratings-adjusted net debt to EBITDA will increase to about 4.5x on a pro forma basis at year-end 2021, before dropping below 4.0x in 2022. We expect funds from operations (FFO) to debt will be about 20% in 2022, with subsequent year-on-year improvement thereafter. We lowered our issuer

...- In February 2021, ICON PLC signed a definitive agreement to acquire PRA Health Sciences Inc. for about $12 billion. We expect the transaction will close in July 2021. - ICON will finance the transaction with a mix of balance sheet cash, new debt instruments, and an equity issuance of about $5.7 billion. As part of this transaction, ICON will fully repay the existing debt facilities at ICON and PRA. - We anticipate ICON's S&P Global Ratings-adjusted net debt to EBITDA will increase to about 4.5x on a pro forma basis at year-end 2021, before dropping below 4.0x in 2022. We expect funds from operations (FFO) to debt will be about 20% in 2022, with subsequent year-on-year improvement thereafter. - We lowered our issuer credit rating on ICON to '##+' from '###-' and removed it from CreditWatch, where we placed it with negative implications on Feb. 25, 2021. We also assigned our '##+' issue rating and '3' recovery rating to the proposed secured debt that ICON will raise to support this transaction....

Research Update