Research Update: Science Applications International Corp. Outlook Revised To Negative On Increased Leverage From Proposed Acquisition

Reston, Va.-based government services and information technology (IT) provider Science Applications International Corp. (SAIC) announced that it is acquiring Unisys Federal from Unisys Corp. for $1.2 billion. The company plans to finance most of the purchase price with debt, which will significantly increase its leverage. We are revising our outlook on SAIC to negative from stable and are affirming our 'BB+' issuer credit rating on the company. At the same time, we are affirming our 'BB+' issue-level rating on the company's first-lien credit facility. This affirmation is based on our understanding of its capital structure pro forma for the acquisition. The '3' recovery rating remains unchanged. The negative outlook reflects that SAIC's leverage will increase due to the transaction and

...- Reston, Va.-based government services and information technology (IT) provider Science Applications International Corp. (SAIC) announced that it is acquiring Unisys Federal from Unisys Corp. for $1.2 billion. - The company plans to finance most of the purchase price with debt, which will significantly increase its leverage. - We are revising our outlook on SAIC to negative from stable and are affirming our '##+' issuer credit rating on the company. - At the same time, we are affirming our '##+' issue-level rating on the company's first-lien credit facility. This affirmation is based on our understanding of its capital structure pro forma for the acquisition. The '3' recovery rating remains unchanged. - The negative outlook reflects that SAIC's leverage will increase due to the transaction and could remain above our 4x debt to EBITDA downgrade trigger for more than 12 months after the transaction closes....

Research Update