Kantar : Another transition year

Credit metrics will be hit a mixture of headwinds 2025 before improving in 2026. Two headwinds are the result of management decisions: 1/ the use of a portion of Kantar Media’s disposal proceeds to repay the expensive Vista vendor loan (leverage impact of 0.2-0.3x, while management previously said that the sale of Kantar Media would be broadly neutral on net leverage) and 2/ the acceleration of transformation and restructuring costs, leading to negative FCF in the region of -$ 100m this year. Other headwinds stem from the $ 135m Numerator earn-out and the adverse macro environment, i.e. the depreciation of the USD (FX mismatch on EUR-denominated debt) and a reduced number of discretionary projects (uncertainty). Consequently, we expect that net leverage will deteriorate from 5.6x to 6.3x this year, before moving back to 5.9x in 2026 as restructuring actions should pay off relatively quickly.
We affirm our Buy recommendation on the 2030 secured notes. They performed in line with the JPM ‘B’ index since their issuance in February and until mid-September. Then have widened in the last weeks following Moody’s rating cut and S&P’s outlook revision to stable. We maintain our Buy recommendation on the notes, based on i/ the 40bp spread premium offered against the average spread of bonds with similar ratings maturities and ii/ our expectation of improving credit metrics in 2026.