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TEXT-S&P: Owens & Minor ratings unchanged by Movianto deal
July 24, 2012 / 6:50 PM / 5 years ago

TEXT-S&P: Owens & Minor ratings unchanged by Movianto deal

July 24 - Standard & Poor's Ratings Services said today that its ratings on
Richmond, Va-based medical products distributor Owens & Minor Inc. (OMI;
BBB/Stable/--) are not affected by the company's binding offer to acquire the
majority of the Movianto Group, a European health care third-party logistics
business, for approximately EUR130 million in cash. The acquisition is generally
in line with our expectations and will complement Owens & Minor's U.S. health
care third-party logistics activities. Owens & Minor had about $214 million of
cash as of March 31, 2012, which should allow the company to fund the
acquisition without altering our view of its "intermediate" financial risk
profile.

Our ratings on OMI incorporate its "satisfactory" business risk profile and 
intermediate financial risk profile. Our assessment of OMI's business risk 
profile as satisfactory reflects the company's position as the largest 
pure-play distributor of medical supplies and devices to U.S. hospitals. The 
expanded global reach of its logistics platform provides some potential for 
growth and increased diversity. The ratings already consider the effect of the 
struggling U.S. economy that we believe will limit organic growth to the 
low-single digits in 2012 and 2013.

We view OMI's financial risk profile as intermediate. As of March 31, 2012, 
credit metrics appear strong relative to our intermediate financial risk 
profile guidelines--funds from operations (FFO) to lease-adjusted debt 
exceeded 50% (versus our 30% to 45% guideline) and lease-adjusted debt to 
EBITDA was 1.4x (below our 2x to 3x guideline). These strong credit measures 
provide some flexibility for future acquisitions or an unforeseen contraction 
of its already narrow margins.

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