Moody's may cut Ashland

Moody's Investors Service said it moved Ashland Inc.'s (Ba1 corporate family rating) ratings outlook to under review for a possible downgrade after the company announced that it had reached an agreement to purchase International Specialty Products Inc. in a transaction valued at $3.2 billion.

Ashland plans to finance the transaction with $2.9 billion of new term loans and about $500 million of existing cash balances.

Moody's also placed ISP Chemco LLC's (Ba3 CFR) ratings under review for a possible upgrade.

The review of Ashland's ratings will focus on the outlook for the combined companies, potential synergies that could be realized, any potential restructuring actions, acquisition financing and costs, any liabilities assumed, the pace at which the company expects to repay the acquisition debt and management's financial goals, Moody's said.

The acquisition is a positive step in Ashland's strategy to transform the company into a higher margin specialty chemicals company, the agency added. ISP will provide Ashland with increased exposure to faster growing markets such as personal care and pharmaceuticals, a more diverse revenue stream and a steadier earnings profile.

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