S&P Global Ratings on Feb. 2 placed Entercom Communications Corp.'s ratings, including the company's B+ corporate credit rating, on CreditWatch with positive implications, following its agreement to combine with CBS Corp.-owned CBS Radio Inc. in a tax-free merger.
The rating agency expects the pending merger to improve Entercom's diversity, scale and pro forma leverage. S&P expects that the combined company's pro forma leverage will be 4x the rating agency's stated upgrade threshold for the B+ corporate credit rating.
The combined company will become the second-largest radio station operator in the U.S. based on a revenue basis, according to S&P. Following the completion of the transaction, the combined company will have 244 stations in 47 markets, which includes 23 of the top 25 markets, and about $1.7 billion in revenue.
The deal, which is subject to approval by Entercom shareholders, is expected to close during the second half of this year, subject to certain regulatory approvals and other customary closing conditions.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.