S&P: Austria-Based Conwert Immobilien Invest 'BBB-' Rating On CreditWatch Positive After Vonovia's Takeover Offer
The CreditWatch placement follows the announcement by Vonovia SE (BBB+/Stable/A-2) of a friendly takeover offer on Conwert's controlling stake. The transaction, if completed, would combine Conwert with a stronger company, and the integration of Conwert's portfolio with Vonovia's should strengthen Conwert's credit quality.
We understand that Vonovia plans to raise up to €1.8 billion of new equity to fund the acquisition price and transaction costs. Even under an alternative scenario under which Vonovia fully finances the deal in cash, we forecast that the combined entity would maintain a debt to debt plus equity ratio below 60%, which is line with our expectation for the current 'BBB+' rating on Vonovia.
The CreditWatch is based on our view that Vonovia's takeover could improve Conwert's overall credit quality. We will resolve the CreditWatch placement when the transaction is finalized and Vonovia begins integrating Conwert.
We could consider upgrading Conwert by up to two notches if the transaction with Vonovia is carried out in line with our views on the stronger credit quality of the combined entity compared with that of Conwert currently.
We would likely affirm our 'BBB-' rating on Conwert if the announced merger with Vonovia falls through, for example, because shareholders do not approve the transaction.