11 January 2011 02:15 [Source: ICIS news]
SINGAPORE (ICIS)--Moody’s Investors Services has placed the A2/Prime-1 ratings of chemicals major DuPont under review after the company announced an agreement to acquire ?xml:namespace>
DuPont said on 10 January that it aims to acquire Danisco in an all cash offer for a transaction valued at around $6.3bn (€4.85bn) including assumed debt.
“If the transaction goes forward as proposed it is likely that DuPont's ratings could be downgraded by one or two notches,” Moody’s said in a investors note.
The acquisition has already brought about concerns about the price paid for the acquisition and the resulting dilution to earnings.
But DuPont executive vice president and chief financial officer Nicholas Fanandakis said during a webcast that the company would strive to minimise the earnings impact.
The review for possible downgrade of DuPont's ratings reflects a shift in strategic and financial policies at DuPont as indicated by the size of the proposed transaction, the note said.
The use of $3bn of cash to fund a portion of this $6.3 billion acquisition also calls into question Moody's willingness to credit future cash balances for use in net debt ratio analysis, it said.
“Furthermore, DuPont's positioning in the A2 rating category was pressured due to the recent economic downturn, combined with capital spending, increased pension liability, and large dividend,” the note added.
Moody's earlier on 24 November last year affirmed ratings and moved Dupont’s outlook to stable.
($1 = €0.77)
To discuss issues facing the chemical industry go to ICIS connect
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections