Symantec (SYMC) Ratings Affirmed by S&P Amid Agreement to Sell Veritas

Standard & Poor's Ratings Services said it kept its ratings, including the 'BBB' corporate credit rating and 'BBB' senior unsecured debt rating, on Mountain View, Calif.-based Symantec Corp. (Nasdaq: SYMC) on CreditWatch, where we placed them with negative implications on Oct. 9, 2014.

"Symantec announced a definitive agreement to sell Veritas, its information management business, to The Carlyle Group for $8 billion in an all-cash transaction," said Standard & Poor's credit analyst James Thomas.

Net of taxes, the firm expects to receive $6.3 billion from the sale, which it expects to close by Jan. 1, 2016. Symantec also announced a $1.5 billion increase in its existing share repurchase program, and stated that the firm's outstanding notes will remain with Symantec. While this transaction will provide Symantec's management with greater strategic focus and financial flexibility, it will also reduce business diversity, as well as revenue and cash flow at the remaining entity. We believe that the impact of this transaction could cause us to lower the rating on Symantec, depending on our understanding of Symantec's financial policy subsequent to the Veritas sale, and its progress in stabilizing operating performance through a sales force transition, acquisitions, and cost cutting. We do not, however, believe that a downgrade below investment grade would be likely.

We will monitor developments related to the proposed transaction, including required approvals for the sale of Veritas. Symantec has stated its goal to maintain investment-grade ratings and at this point we do not expect to lower the rating below investment grade.

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