S&P: Hankyu Holdings still on watch

Standard & Poor's said its BB long-term corporate credit and BB+ senior unsecured debt ratings on Hankyu Holdings Inc. remain on CreditWatch with negative implications, following the commencement of a takeover bid for a stake in Hanshin Electric Railway Co. Ltd.

If the bid is successful, Hankyu's financial profile will likely deteriorate, which will have a negative impact on its credit quality, the agency said.

S&P noted that Hankyu initiated the takeover bid with the aim of acquiring 45% or more of the outstanding shares in Hanshin and added that the company plans to make Hanshin into a wholly owned subsidiary through a swap of the remaining shares in the company following a successful bid.

The agency said that positive integration effects from the business consolidation are expected to be limited as there are no apparent advantages in the railway business over its major competitor West Japan Railway Co. (A+/stable), given small complementary effects from their railway routes and differences in types of rolling stock.

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