Nordic Credit Rating has revised the outlook on its 'A-' long-term issuer rating on Norway-based NorgesGruppen ASA to negative from stable. The long-term rating was affirmed, as was the 'A-' senior unsecured issue rating and 'N2' short-term rating.
Rating rationale
The outlook revision reflects NorgesGruppen's announced acquisition of Norway-based pharmacy retailer Norsk Medisinaldepot AS (NMD) from American-based McKesson for an undisclosed amount (6 Aug. 2025). We expect the transaction to close in the second half of 2025, subject to approval by the Norwegian Competition Authority (NCA), and that the acquisition will increase NorgesGruppen's leverage.
NMD operates the Vitus Apotek and Ditt Apotek pharmacy chains, comprising 386 pharmacies and more than 3.000 employees. The company also has established wholesale distribution operations and produces pharmaceuticals under its own brands. The pharmacy retail chains account for about 33% market share in the Norwegian pharmacy market, estimated at approximately NOK 44bn. This compares to NorgesGruppen's estimated 28% share of the total Norwegian food market (NOK 380bn in 2024).
NorgesGruppen has maintained a stable NCR-adjusted net debt/EBITDA about 2.6x in recent years, and we have previously expected this to decline to 2.4x in 2026-2027. We anticipate an increase in leverage following the transaction. We also expect the interest coverage ratio to decline somewhat from earlier estimates of 8x in 2026-2027.
In our view, the pharmacy segment aligns well with the group's low-cyclicality business model, supporting both horizontal and vertical integration. Given NorgesGruppen's leading position in the retail grocery sector, we expect the group to achieve synergies and strengthen its market position over the longer term. We consider the increased segment diversification and product offerings as positive for NorgesGruppen's business risk profile.
Negative outlook
The negative outlook reflects a possible negative effect of the transaction on NorgesGruppen's financial risk profile, which may overshadow a potential positive effect on the business risk profile. Moreover, we are cautious regarding a possible rejection of the transaction or demand for mitigating actions from the NCA.
We could lower the rating to reflect net debt/EBITDA above 3x and FFO/net debt below 25% over a sustained period, EBITDA margins below 8% over a protracted period, or new legislation that erodes market position or profitability.
We could revise the outlook to stable to reflect net debt/EBITDA below 3x and FFO/net debt above 25% over a sustained period, if the transaction's positive effects on business profile adequately compensates the heightened financial risk profile, or if the transaction does not proceed.
Related publications
NorgesGruppen ASA long-term issuer rating raised to 'A-'; Outlook stable, 4 Jun. 2025.
| Rating list | To | From |
|---|---|---|
| Long-term issuer credit rating: | A- | A- |
| Outlook: | Negative | Stable |
| Short-term issuer credit rating: | N2 | N2 |
| Senior unsecured issue rating: | A- | A- |
Contacts:
Christian Yssen, analyst, +4740019900, christian.yssen@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Geir Kristiansen, analyst, +4790784593, geir.kristiansen@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.