Elis (ELISGP; Ba1 Pos/BBB-) Target Vestis offloads small stake in Japanese arm
Vestis is offloading a 39% stake in a Japanese JV for ~$37m. It does not expect to record a material gain or loss and it was not consolidated in accounts (i.e. no earnings impact). It says proceeds will go to debt paydowns; it had $1.5b at the end of June leaving it high 3-turn levered on earnings.
We don't see read-through to the Elis bid on above....there have been no updates on the proposed offer made by Elis leaving Vestis equities +11% and Elis -18%.
Our current assumption is for €0.9b of supply on close at pro-forma leverage of net 2.8x - we expect remainder ~€1b to be in equity financed. We don't expect rating downgrades on close but there is integration risk given Vestis recent lack of growth while running ~half the margins.
Presser here