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S&P revises outlook on Exor to positive on FCA-Peugeot merger


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S&P revises outlook on Exor to positive on FCA-Peugeot merger

S&P Global Ratings revised the outlook on Exor NV to positive from stable and affirmed its ratings at BBB+/A-2 after Fiat Chrysler Automobiles NV and Peugeot SA announced a proposed merger to create the fourth-largest global automaker by volume and the third-largest by revenue.

FCA represents about 23% of Exor's portfolio. Exor is expected to receive a €1.6 billion extraordinary dividend from the merger and is poised to become the combined entity's most influential shareholder with a 14% stake. The transaction will also derisk Exor's exposure to the troubled global auto industry, the rating agency said.

"The positive outlook primarily reflects the impact of the proposed merger of FCA and [Peugeot] on Exor's portfolio in terms of a higher resilience of the combined entity to a challenging auto industry environment," S&P Global Ratings said. The rating agency also expects the merger to improve Exor's financial flexibility with the potential of a more diverse and stable invested capital.

The outlook revision also followed recently announced plans by CNH Industrial NV, which represents 16% of Exor's portfolio, to spin off its commercial vehicles and powertrain segments division. S&P Global Ratings does not expect Exor to make any significant material investments beyond FCA-Peugeot merger and CNH's planned spin-off, allowing the holding company to keep its conservative loan-to-value ratio below 20%, in line with its financial policy.

The rating agency said it could upgrade the holding company over the coming 12-18 months by one rank if its continues to maintain conservative leverage.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.