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S&P lowers outlook on Sika over funding uncertainty for Parex deal


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Banking Essentials Newsletter: 17th April Edition

S&P lowers outlook on Sika over funding uncertainty for Parex deal

S&P Global Ratings lowered the outlook on Sika AG's ratings to negative from stable over uncertainty about the company's planned financing for the proposed acquisition of mortar manufacturer ParexGroup SA.

The deal is initially expected to be funded via a CHF2.5 billion bridge loan facility that will effectively double Sika's debt level, the rating agency noted. The bridge facility will last for 18 months, including two extension options at Sika's discretion.

Parex is "highly complementary" to Sika's portfolio and the deal will help expand its offerings in the mortar segment to double the overall sales from the unit, S&P said. However, the agency warned that it could lower Sika's rating by one notch if its metrics do not improve quickly after refinancing the bridge facility for the deal.

S&P also affirmed its long- and short-term issuer credit ratings on Sika at A-/A-2.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.