Fitch: Saint-Gobain on watch

Fitch Ratings said it placed Compagnie de Saint-Gobain’s long-term issuer default rating and senior unsecured rating of BBB on Rating Watch negative, along with its short-term issuer default rating of F2.

The negative watch placement follows news of the group’s CHF 2.75 billion acquisition of Sika AG, Fitch said.

The watch reflects the uncertainty surrounding Saint-Gobain’s de-leverage profile following the Sika acquisition and execution risk around the sale of Saint-Gobain’s remaining packaging unit Verallia, which could offset the purchase consideration paid for Sika, the agency said.

Fitch also said it will adjust Saint-Gobain’s credit metrics to reflect its 16% economic interest in Sika, accounting for the proportion of dividends attributable to Saint-Gobain as funds from operations, which were about €20 million at the end of 2013.

Saint-Gobain’s business profile will partially benefit from Sika’s exposure to high-growth emerging markets, particularly in Asia, Fitch said, and a higher-margin value-added product portfolio.

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