Fitch might drop Whirlpool

Fitch Ratings said it placed Whirlpool Corp.’s ratings on Rating Watch Negative following the company's announcement that it entered into binding agreements to acquire a majority interest in Indesit Co. SpA for about $1,038,000,000.

The acquisition of the controlling interest in Indesit is subject to judicial and antitrust approvals and is expected to close by the end of 2014.

While Fitch views the transaction as strategically positive for Whirlpool, negative rating actions are likely given the projected increase in leverage from higher debt levels (debt to be assumed and the debt incurred to finance the acquisition).

In June, the agency affirmed Whirlpool's issuer default rating at BBB and revised the outlook to positive from stable with the expectation that the company's credit metrics continued to improve, including debt to EBITDA situating in the 1x-1.5x and interest coverage consistently above 10x.

An upgrade of Whirlpool's ratings is now unlikely, Fitch said.

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