This report does not constitute a rating action.
LONDON (S&P Global Ratings) June 28, 2024--S&P Global Ratings said today that U.K. social housing provider Bromford Housing Group’s (A+/Stable/--) currently strong financial indicators would mitigate potential pressure of a business combination between Bromford and its peer Flagship Housing Group (not rated). As a result, we do not expect the business combination to have an immediate impact on our rating on Bromford.
The two groups announced on June 26, 2024, that they have entered into discussions regarding a potential business combination, creating a new organization that will trade as Bromford Flagship. The combined organization would own and manage close to 80,000 homes. Under the current proposals, Bromford would remain the group parent, which will be renamed Bromford Flagship Limited. Flagship will become a wholly owned subsidiary of Bromford Flagship Limited, alongside Bromford Housing Association Limited, Merlin Housing Society Limited, and other existing entities. We understand that the boards of both groups have confirmed their intention to enter into the business combination, and this will be subject to formal board approval and registration by the Financial Conduct Authority.
Although limited information is available about the new organization's business plan at this stage, we have considered Flagship's public information. In our view, although its financial performance is weaker and debt burden is higher than those of Bromford, the difference is not material enough to have an immediate impact on our rating on Bromford. We consider that Bromford's management expertise and the combined group's large asset base should help counterbalance the challenges associated with combining two large organizations.
Related Research
- U.K.-Based Social Housing Provider Bromford Housing Group Outlook Revised To Stable From Negative; Affirmed At 'A+', July 10, 2023
Primary Contact: | Mahek Bhojani, London 44-2071760846; mahek.bhojani@spglobal.com |
Secondary Contact: | Karin Erlander, London 44-20-7176-3584; karin.erlander@spglobal.com |
Analytical Group Contact: | EMEA Sovereign and IPF, ; SovereignIPF@spglobal.com |
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