S&P puts Compagnie Générale de Géophysique on watch

Standard & Poor's said it placed its BB- long-term corporate credit and senior unsecured debt ratings on Compagnie Générale de Géophysique (CGG) on CreditWatch with negative implications.

The agency said that the placement follows the announcement by CGG of a friendly $3.1 billion takeover bid for U.S. competitor Veritas DGC Inc. (BB/stable).

If the acquisition goes ahead under the current terms, close to 50% or $1.5 billion of it will be paid in cash, resulting in a substantial increase in CGG's consolidated net financial debt to an estimated €1.4 billion, S&P said.

The agency added that the very expensive price with a premium of 35% above Veritas' 30-day average share price to Aug. 29 is its key concern.

These factors could be offset, though, by the good geographic fit of the two entities' operations and the strengthened leading global position of the combined entity that, with WesternGeco, part of Schlumberger Ltd. (A+/stable/A-1), would be one of two global leaders, S&P said.

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