S&P puts VF on watch

Standard & Poor's said it placed an A- corporate credit on VF Corp. on CreditWatch with negative implications.

The CreditWatch placement follows news that the company entered into a definitive agreement to acquire the Timberland Co. for $43 per share or about $2 billion net of cash acquired.

The transaction is subject to Timberland shareholder approval and regulatory approval. The agency said it expects the transaction to close in the third quarter of 2011.

S&P said the addition of the Timberland platform is considered complementary to VF's existing platform, but this is tempered by its weakened financial profile and some integration risk, particularly given the large size of the acquisition.

The agency said it believes the substantially debt-financed transaction would weaken VF's credit protection measures modestly and adjusted leverage is expected to increase to more than 2x for fiscal 2011.

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