TEXT-S&P puts Nielsen Holdings 'BB' rating on watch negative
Overview -- U.S.-based global information and measurement company Nielsen Holding N.V. has entered into a definitive agreement to acquire Columbia, Md.-based Arbitron Inc. -- We expect that Nielsen's adjusted debt leverage will rise to slightly above 5x pro forma for the transaction. -- We are placing our 'BB' corporate credit rating for Nielsen on CreditWatch with negative implications. -- The CreditWatch listing reflects the increased leverage and our uncertainty that the company will be able to reduce leverage back below 5x in the next year. Rating Action On Dec. 18, 2012, Standard & Poor's Ratings Services placed its ratings on U.S.-based global information and measurement company Nielsen Holding N.V. on CreditWatch with negative implications. This includes the 'BB' corporate credit rating on both Nielsen and wholly owned subsidiary The Nielsen Co. B.V., as well as all issue-level ratings on the company's debt. Rationale This action follows the company's announcement that it has entered into a definitive agreement to acquire Columbia, Md.-based Arbitron Inc. for about $1.3 billion in cash. The move sets back the company's progress of the last two years toward lower leverage. We also view the acquisition as consuming significant financial resources without furthering the development of, and position in, Internet audience measurement. Instead, the transaction increases the company's exposure to traditional media (radio and television). We view radio, in particular, as under long-term structural pressure that we think could hamper Nielsen's ability to obtain rate increases on its services. Adjusted leverage will rise to slightly over 5x on a pro forma basis based on Sept 30, 2012 financials if the transaction is fully funded with debt, as we anticipate. CreditWatch We will resolve the CreditWatch listing after evaluating the company's future capital allocation plan, specifically its ability to reduce leverage to below 5x on a sustained basis. If leverage were to remain above 5x, we would likely lower the rating by one notch, to 'BB-'. Related Criteria And Research -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 -- Standard & Poor's Revises Its Approach To Rating Speculative-Grade Credits, May 13, 2008 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 Ratings List CreditWatch Action To From Nielsen Holdings N.V. Corporate Credit Rating BB/Watch Neg/-- BB/Stable/-- Subordinated* B+/Watch Neg B+ Recovery Rating 6 6 The Nielsen Co. B.V. Corporate Credit Rating BB/Watch Neg/-- BB/Stable/-- Senior Unsecured B+/Watch Neg B+ Recovery Rating* 6 6 Nielsen Finance Co. Senior Secured BBB-/Watch Neg BBB- Recovery Rating* 1 1 Senior Unsecured BB-/Watch Neg BB- Recovery Rating* 5 5 Nielsen Finance LLC Senior Secured BBB-/Watch Neg BBB- Recovery Rating* 1 1 Senior Unsecured BB-/Watch Neg BB- Recovery Rating* 5 5 *Standard & Poor's does not place its recovery ratings on CreditWatch; however, this does not preclude our recovery assessment from potentially changing in the future. Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
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