(Finance) – Fitch Ratings has placed the Long-Term Issuer Default Rating (IDR) “B” on the Italian company Bormioli Pharma in Rating Watch Positive (RWP).
Bormioli announced on May 23 that its major shareholder, Triton Investments Advisers, has agreed to sell the company to Gerresheimer Glas, a subsidiary of Gerresheimer. The deal will be completed by the end of 2024 subject to regulatory approval. As part of the transaction, the new owner will provide Bormioli with i funds necessary for the repayment of bonds and for prepayment and cancellation of obligations.
The RWP reflects Fitch’s expectations that the transaction will be “rating positive”, given that will strengthen the financial profile of Bormioli and will make it part of a group with a stronger credit profile. According to the ratings agency, Gerresheimer has a stronger business profile, reflecting its larger scale, better geographic diversification and stronger financial metrics with lower leverage than Bormioli.
Bormioli’s IDR is supported by its leading position in the pharmaceutical packaging market, long-term partnerships with customers, resilient profitability throughout the cycle, supported by exposure to the non-cyclical pharmaceutical industry and expected improvement of financial leverage and free cash flow (FCF) generation. There limited geographic diversification and the expected marginally negative FCF generation in 2024-2025 represent rating constraints. However, stable long-term demand for Bormioli products and a favorable market environment are key mitigating factors.