Reuters logo
TEXT-S&P puts SS&C Technologies 'BB' rating on watch negative
March 1, 2012 / 10:57 PM / 6 years ago

TEXT-S&P puts SS&C Technologies 'BB' rating on watch negative

 (The following statement was released by the rating agency)	
Overview	
  -- U.S. financial services industry software provider SS&C Technologies 	
announced yesterday that it is acquiring the assets of Thomson Reuter's PORTIA 	
business for $170 million in a debt-financed transaction.	
  -- Pro forma for the PORTIA transaction alone, SS&C's adjusted leverage 	
would only approach the 2x area, which is comfortably within the current 	
rating parameters. 	
  -- Additionally, SS&C continues to explore a potential cash-based 	
acquisition of U.K.-based GlobeOp, whose purchase price could exceed $800 	
million and, if financed mostly with debt, could initially push leverage 	
further, to above 5x.	
  -- We are placing our 'BB' corporate credit rating on SS&C on CreditWatch 	
with negative implications.	
	
Rating Action	
On March 1, 2012, Standard & Poor's Ratings Services placed its 'BB' corporate 	
credit rating on Windsor, Conn.-based SS&C Technologies Inc. on CreditWatch 	
with negative implications. 	
	
Rationale	
The CreditWatch listing follows SS&C's Feb. 29, 2012 announcement that it will 	
acquire the assets of Thomson Reuter's PORTIA business for $170 million in 	
cash. SS&C will issue a $175 million term loan to finance the acquisition. Pro 	
forma for the acquisition, we believe SS&C's adjusted leverage will increase 	
from 0.9x to about 2.0x based on December 2011 results, excluding  any 	
additional EBITDA contribution from PORTIA, since it was not disclosed. 	
	
This transaction by itself does not alter our view of the current rating, 	
which incorporates incremental debt capacity for leverage of up to about 3x 	
EBITDA on a sustained basis. Additionally, although SS&C has historically been 	
acquisitive, it has demonstrated successful integration of its acquisitions, 	
while maintaining consistent profitability.	
	
At the same time, according to SS&C's Feb. 15, 2012 press release, it 	
continues to conduct due diligence and is in active discussions with banks 	
regarding a cash offer for U.K.-based GlobeOp Financial Service. GlobeOp, a 	
financial technology provider to the hedge fund industry, agreed to be 	
acquired by TPG Capital LLC. for approximately $800  million in early 	
February. 	
	
We believe that this acquisition, if completed, could strengthen SS&C's 	
business risk profile through potential market share gains and operational 	
synergies, given its similar product and end-market focus. However, we 	
estimate that if SS&C finances the GlobeOp acquisition with mostly debt, 	
initial adjusted leverage could rise above 5x and lead us to revise our 	
"significant" financial risk profile (as defined in our criteria).	
	
CreditWatch	
We will monitor developments related to the possible GlobeOp acquisition and 	
resolve the CreditWatch listing when more information regarding a potential 	
transaction and financing becomes available. If an all debt-financed 	
acquisition of GlobeOp were to occur, we could lower the rating to the 'B' 	
category. If SS&C does not complete the acquisition, we will review its growth 	
plans and financial policy before resolving the CreditWatch. 	
	
Related Criteria And Research	
  -- U.S. Technology Companies' Liquidity Is Higher, For Now, Jan. 18, 2012	
  -- Industry Economic Outlook: Slow Global IT Spending Growth Is Likely To 	
Continue Into 2012, Jan. 12, 2012	
  -- Issuer Ranking: Global Technology Ratings, Strongest To Weakest, Dec. 	
22, 2011	
  -- Reshuffling The Debt: Global High-Tech M&A Activity Accelerates, Oct. 	
13, 2011	
  -- Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011	
  -- Key Credit Factors: Methodology And Assumptions On Risks In The Global 	
High Technology Industry, Oct. 15, 2009	
  -- Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, 	
May 27, 2009	
  -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008	
Ratings List	
CreditWatch Action	
                                     To                 From	
SS&C Technologies Inc.	
 Corporate Credit Rating                BB/Watch Neg/--    BB/Stable/--	
	
Complete ratings information is available to subscribers of RatingsDirect on 	
the Global Credit Portal at www.globalcreditportal.com. All ratings affected 	
by this rating action can be found on Standard & Poor's public Web site at 	
www.standardandpoors.com. Use the Ratings search box located in the left 	
column.	
	
 (New York Ratings Team)	
 

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below