Camargo Correa on Rating Watch Negative

Camargo Correa on Rating Watch Negative
Published: 09 April 2012

Tagged Under: Cimpor Camargo Correa 

Fitch Ratings has placed all of the ratings of Camargo Correa and its subsidiaries on Rating Watch Negative following the Brazilian conglomerate's announcement that it intends to buy full control of Cimpor.
 
Last week Camargo made a public offer for the remaining 67 per cent of Cimpor which it does not own. At EUR5.5 per share, the deal is the equivalent to EUR2.5bn.
 
Fitch views the proposed transaction as negative to Camargo's credit quality considering potential leverage being added to the business through this strategic acquisition.
 
Camargo's capital structure was already under pressure from high leverage and weak results, and this transaction, as proposed would likely not allow the company to deleverage to the degree that was previously anticipated by Fitch.
 
Strategically, the proposed transaction would increase Camargo's presence in the global cement market and broaden its geographic diversification. It would also generate synergies with Camargo's highly correlated core businesses of cement, engineering and construction.