Following the announcement by Holcim to merge with Lafarge SA, Fitch Ratings has affirmed the Swiss major's Long-term Issuer Default Ratings (IDR) at 'BBB'. The Outlook is Stable.
The affirmation reflects the combined group's improved scale, diversification and market positions on completion of their announced merger and the synergy potentials between the two companies.
“We forecast funds from operations (FFO) adjusted leverage in excess of 3.5x for the combined group in 2015, compared to 3.5x for Holcim in 2013, given Lafarge's higher leverage and the contemplated all share transactions, with no additional debt to be raised by either. We expect substantial disposal proceeds from the contemplated sale of around 10-15 per cent of the combined group's EBITDA, which could improve the combined group's financial flexibility, if proceeds are used to repay debt,” Fitch said in a statement.