Fitch affirms BASF on €3.1bn takeover deal for Cognis

23 June 2010 19:12  [Source: ICIS news]

TORONTO (ICIS news)--Fitch on Wednesday affirmed its ratings for BASF following the German chemical major’s €3.1bn ($3.8bn) deal to acquire specialty chemicals producer Cognis.

The credit ratings agency said the deal would be positive for BASF’s position in the specialty chemicals sector.

Fitch assessed both BASF’s long-term issuer default rating and the senior unsecured rating at A+.

The move contrasted with Moody's view. Moody's earlier on Wednesday placed BASF's A-1 long-term credit rating under review for a possible downgrade.

Moody’s said BASF’s retained cash flow to net debt ratio might fall below 30% with the deal for Cognis, which would suggest a one-notch downgrade to A-2.

BASF chief executive Jurgen Hambrecht said on Wednesday that retaining a solid A rating was a priority for the company and that its focus would be on cash flow and de-leveraging. 

He suggested that there would be no further major acquisitions over the next two years.

BASF expects to complete the Cognis acquisition in November.

The acquisition of Cognis was BASF’s largest since it bought specialty chemicals major Ciba in a €3.9bn deal that closed in April last year. That deal had prompted Moody's to downgrade BASF's rating to A-1, from Aa3.

($1 = €0.81)

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By: Stefan Baumgarten
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