Fitch Ratings has placed Thomson Reuters Corp.'s BBB+ long-term issuer default rating and F2 short-term issuer default rating on Rating Watch Negative after the company agreed to sell a 55% majority stake in its financial and risk business to private equity funds managed by Blackstone Group LP.
The watch placement reflects Thomson Reuters' "material transformation" contemplated by the Blackstone deal, which would result in a company with much less revenue and cash flow scale and diversity and a different risk profile versus the legacy company, peers and current ratings expectations.
Fitch expects to resolve the Rating Watch before the transaction closes, noting that if there is a downgrade, it will be limited to one notch. The review will focus on the growth characteristics, competitive positioning and investment requirements of Thomson Reuters' remaining businesses and on the financial risks in the business model and capital structure in the context of expected lower revenue, product and cash flow diversity.
