S&P alters Kroger view to negative

S&P said it affirmed its ratings on Kroger Co., including the BBB issuer credit rating and issue-level ratings, and revised the outlook to negative.

Kroger announced it is acquiring Albertsons Cos. Inc. in a deal that values Albertsons at an implied equity purchase price of $19.9 billion (implied total enterprise value of approximately $24.6 billion, including the assumption of approximately $4.7 billion of ACI net debt).

The deal will be all cash, initially funded with a $17.4 billion bridge financing that S&P anticipates will eventually be replaced with cash, term loans, and unsecured notes.

“The negative outlook reflects elevated leverage pro forma for the transaction, which we expect to reach 4x at close, before subsiding in subsequent years,” S&P said in a news release.

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