16 September 2008 15:24 [Source: ICIS news]
MUMBAI (ICIS news)--Standard & Poor’s cut its rating on the German chemical producer BASF following the announcement of the company’s $5.5bn (€3.9bn) bid to acquire Swiss specialty chemicals producer Ciba, the credit ratings agency said on Tuesday.?xml:namespace>
S&P cut BASF’s ratings from “stable” to “negative” on concerns the company’s credit protection ratios would weaken in 2009 due to the Ciba acquisition, it said.
“We already consider BASF's business risk profile excellent and we do not expect the Ciba acquisition to change this. Nevertheless, although diversification will further improve, profitability will be somewhat diluted.,” said S&P credit analyst Tobias Mock.
“With this purchase, BASF will further expand its specialty chemicals operations and continue to reduce its dependency on the petrochemical cycle. It will make BASF the market leader in paper chemicals, from its current No 4 position,” Mock added, however.
"We expect the acquisition to be successful because BASF is offering a substantial premium and Ciba's board of directors supports the offer," he said.
BASF enjoyed global sales of around €58bn in 2007 and was the leading chemicals company in terms of sales, according to ICIS.
($1 = €0.70)
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