S&P places Sitel on positive watch

S&P said it placed Sitel Group SA’s issuer and term loan ratings on CreditWatch with positive implications.

The positive watch follows the announcement Sitel and Majorel SA agreed to merge in a cash and stock merger, the agency said. Sitel will own a 56.1% stake in the combined company.

“We expect the transaction to close in the fourth quarter of 2022 or first quarter of 2023. Sitel's scale, operating leverage, and geographic diversity will improve following the transaction. Pro forma 2021 revenue for the combined companies was €5.4 billion, and EBITDA could exceed €1 billion after €100 million of expected synergies. This would place the combined business as one of the largest global customer experience companies. Still, we believe the companies are only in the early stages of their due diligence, and the level of synergies achieved could differ from current expectations,” S&P said in a press release.

The agency said it aims to resolve the CreditWatch after the deal closes. “We could raise the ratings if we believed that the merger materially improved our view of Sitel's business or if we expected pro forma leverage to improve below 4x on a sustained basis.”

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