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S&P puts Dell, EMC on watch
Standard & Poor’s said it affirmed the BB+ corporate credit rating on Dell Inc.
The agency also said it placed the BBB rating on the senior secured credit facilities of Dell International LLC, a wholly-owned subsidiary of Dell, on CreditWatch with negative implications.
S&P also said it placed the BB+ rating on Dell’s senior unsecured notes on CreditWatch with negative implications.
The outlook is stable.
Details of the financing terms, including the amount of total debt issuance, the amount of secured debt compared to unsecured debt and the amount to be issued at each borrowing entity have not been disclosed, S&P said.
The agency also said it placed the A corporate credit rating on EMC Corp. on CreditWatch with negative implications, along with the A rating on EMC’s senior unsecured notes and A-1 short-term rating on its commercial-paper program.
Dell’s affirmed ratings reflect the company’s improved business risk profile as the acquisition of EMC strengthens Dell’s existing product portfolio to include market leadership positions in PC, servers, storage and virtualization software, S&P said.
The acquisition also enhances Dell’s position as a critical IT business partner with its customers and supply chain partners, improves its profitability profile as a result of better product mix and enables the opportunities for revenue and cost synergies, the agency said.
Offsetting these factors is a view that the transaction will weaken the company’s financial risk profile due to higher debt leverage, S&P said.
Although the transaction should yield cost synergies, the combination of Dell’s and EMC’s sales forces could present integration challenges, the agency said.
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