(The following statement was released by the rating agency)
LONDON, September 06 (Fitch) Fitch Ratings says German
Fresenius SE & Co KGaA's (FSE; BBB-/Stable, including Fresenius
Medical Care AG
& Co. KGaA (FMC), together Fresenius) acquisition of Spain-based
hospital group Quironsalud for an estimated EUR5.76bn, will have
no impact on
its existing ratings.
Despite being predominantly debt-funded, the transaction will
available under the current rating, as Fitch estimates
consolidated funds from
operations (FFO) adjusted net leverage upon completion to peak
at 4.1x in 2017,
comfortably within Fitch's negative rating sensitivity of 4.5x.
leverage post-acquisition is helped by EUR400m of new Fresenius
shares that will
be issued to finance part of the transaction, as well as the
resilient operational qualities of the acquired business.
Fitch expects Quironsalud to be cash-generative and
Fresenius, supporting a smooth deleveraging path over the
horizon. Fitch forecasts net debt-to-EBITDA will return inside
long-term leverage guidance of 2.5x-3.0x within 18 months of
also projects FFO fixed charge cover will remain comfortably
above 3.0x, fully
consistent with its 'BBB-' rating, even once a more permanent
debt structure has
been established from planned debt capital market issues.
While the Quironsalud transaction will temporarily increase
at FSE, Fitch is confident in its satisfactory deleveraging
we do not expect a significant divergence in FSE's and FMC's
profiles, supporting the alignment of their respective IDRs at
We expect Fresenius to continue to scale up its existing four
divisions by way
of acquisitions. In this context, we view the addition of
positive for the group's business risk profile, adding further
diversification to its Fresenius Helios unit. The transaction
significant strategic step to expand private hospital operations
Germany, where limited opportunities for further growth and
Fitch views the transaction as a strategic move towards the
creation of a
pan-European private hospital player.
Fitch expects synergy opportunities between the German and
Spanish operations to
develop over time, stemming from scale benefits, administration
knowledge transfer and procurement, although we expect
focus would be on continuing the integration efforts at
Quironsalud. Fitch views
the execution risk associated with this acquisition as moderate,
management has a strong record and experience in integrating
chains as evidenced by the acquisition of hospitals from
Rhoen-Klinikum in 2013.
Fitch believes the Spanish private healthcare sector offers some
fundamentals, and is somewhat resilient from the recent economic
its non-discretionary nature, strong secular growth trends, a
recent focus on
liberalisation and the creation of public-private partnerships.
Furthermore, Fitch expects private health insurance cover in
Spain to grow from
the current penetration of around 20% as insurers target the
tailored products, supporting positive growth dynamics in the
sector. Quironsalud generates just above 50% of its revenues
from private payers
and health insurances. These benefits, however, are conditional
on strict cost
control and a focus on working capital, which has led to some
performance for Fitch-rated peers in the region.
Quironsalud is the leading private hospital operator in Spain,
created in 2014 by a series of mergers under private equity
ownership. The group
operates 43 hospitals, 39 outpatient centres and around 300
prevention centres in Madrid, Barcelona and other key Spanish
around EUR2.4bn of revenues in 2015.
+44 20 3530 1292
+44 20 3530 1037
Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530
Additional information is available at www.fitchratings.com.
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