US Praxair apt for mid-size acquisition - S&P

04 March 2008 21:36  [Source: ICIS news]

HOUSTON (ICIS news)--US industrial gases firm Praxair is in a position to take advantage of opportunities to grow via acquisition, the Standard and Poor’s  (S&P) ratings service said on Tuesday. 

The agency assigned an “A” senior unsecured debt rating to proposed $500m (€330m) of seven-year notes, citing the company’s strong business profile, resilient cash flows and operating margins, and solid financial ratios.

"These strengths, coupled with the substantial precentage of revenues under long-term contract will allow Praxair to continue to take advantage of moderate-size acquisitions," S&P said in a bulletin.

Praxair will use the note's proceeds to repay short-term debt, fund share repurchases and for general corporate purposes, the rating agency said.

S&P affirmed its “A” long-term and “A-1” short-term corporate credit ratings for the Danbury, Connecticut-based industrial gases manufacturer. The credit outlook remained stable for the Praxair, S&P said.

"The credit quality of Praxair, a leading industrial gas producer, reflects a strong business profile," said Standard & Poor's credit analyst Wesley Chinn.

Praxair's net income performance and discretionary cash flows enhance the company's ability to address heavy capital investments, period acquisitions, and common stock repurchases and still sustain financial ratios at strong ratios throughout the business cycle, S&P said in a statement.

“However, the capital intensity of the business and the cyclicality of US manufacturing activity are tempering factors.” 

A meaningful departure from the expected financial and operating strategies, such as would occur with a larger-than-anticipated acquisition, could challenge the underpinnings of the ratings, S&P said.

Shares of Praxair were trading on Tuesday afternoon at $80.03, down 92 cents, on the New York Stock Exchange.

($1 = €0.66) 

By: Brian Ford
+1 713 525 2653

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