Ashland, Hercules placed on credit watch – S&P

14 July 2008 03:57  [Source: ICIS news]

SINGAPORE (ICIS news)--Ratings agency Standard and Poors (S&P) on Saturday placed both Ashland and Hercules on credit watch with negative implications following the planned $3.3bn (€2.08bn) acquisition of the latter by the former.

Although transaction is currently contemplated to be primarily debt-financed, the acquisition would also include about $500m of stock and Ashland’s substantial cash balances, S&P said, adding that Ashland had a low leverage to start with.

Nonetheless, “From a business risk perspective, the Hercules transaction would be a strong positive as it would add substantial specialty chemical assets with investment-grade business characteristics, creating a company with more than $10bn in annual revenues,” it said.

The resulting entity should result in more favourable growth prospects and a more stable and profitable chemicals company, S&P added.

Meanwhile, Moody’s has also placed the two specialty chemicals firm under review for possible downgrades citing reasons largely the same as S&P.

Ashland, headquartered in Covington, Kentucky, is a manufacturer of specialty chemicals with a focus on performance materials and water technologies.

Hercules is a global supplier of specialty chemicals and related services for the paper, paint, consumer products, construction materials and energy markets.

($1 = € 0.63)

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By: Bohan Loh
+65 6780 4359

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