S&P Global Ratings assigned a B rating to French nursing homes operator Financière Colisée SAS following the latter's announcement that it is acquiring Belgian nursing homes operator Armonea NV.
The outlook is negative.
The acquisition is expected to close in early May, subject to regulatory approvals.
The transaction will result in the fourth-largest nursing homes operator in Europe with a revenue base of €1 billion, operating 280 facilities across France, Belgium, Spain, Germany and Italy.
The company's entry into Belgium, with its stable regulatory environment and relatively high barriers to entry with bed license caps that push up high occupancy rates, is expected to have a positive impact on the company, S&P said.
The negative outlook incorporates the rating agency's view that the company could fail to seamlessly integrate the new assets and deliver on its revenue growth plan.
S&P expects the combined entity to generate an adjusted EBITDA margin of roughly 24.5% and an EBITDA margin after rental payments of roughly 11.0%.
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