Research Update: Securitas AB 'BBB' Rating Placed On CreditWatch Negative On Announced Debt-Funded Acquisition Of Stanley Security

Sweden-based security firm Securitas plans to acquire the electronic security solutions business from U.S.-based Stanley Black&Decker Inc. (Stanley Security) for about $3.2 billion. We expect Securitas to fund the acquisition with a mix of new debt and equity, and we assume the transaction will materially increase the company's S&P Global Ratings-adjusted debt to EBITDA to above 4x in 2022 from about 2x in 2021. However, we expect the company will reduce leverage in the coming years to ensure funds from operations (FFO) to debt rebounds above 20% and adjusted debt to EBITDA reduces to comfortably below 4x. We placed our 'BBB/A-2' long- and short-term issuer credit rating on Securitas AB, as well as the 'BBB' issue rating on

...- Sweden-based security firm Securitas plans to acquire the electronic security solutions business from U.S.-based Stanley Black & Decker Inc. (Stanley Security) for about $3.2 billion. - We expect Securitas to fund the acquisition with a mix of new debt and equity, and we assume the transaction will materially increase the company's S&P Global Ratings-adjusted debt to EBITDA to above 4x in 2022 from about 2x in 2021. However, we expect the company will reduce leverage in the coming years to ensure funds from operations (FFO) to debt rebounds above 20% and adjusted debt to EBITDA reduces to comfortably below 4x. - We placed our '###/A-2' long- and short-term issuer credit rating on Securitas AB, as well as the '###' issue rating on the unsecured debt, on CreditWatch with negative implications. - The CreditWatch negative placement reflects the increased likelihood of a downgrade, since this debt-funded acquisition is likely to markedly weaken Securitas' FFO to debt to below our downside...

Research Update