S&P lowers Sika view to negative

S&P said it revised the outlook on Sika AG to negative from stable.

The agency also said it affirmed the company's A-/A-2 long- and short-term issuer credit ratings.

S&P also said it affirmed the ratings on all Sika's outstanding senior unsecured bonds.

The outlook revision reflects the uncertainty around the ultimate financing of Sika's CHF 2.5 billion acquisition of the construction chemicals company Parex, the agency said.

Sika's management anticipates that the transaction will close in the second or third quarter of 2019, subject to regulatory approvals, S&P said.

The acquisition will initially be financed through a CHF 2.5 billion bridge loan facility, effectively doubling Sika's debt level, S&P said.

The acquisition is in line with Sika's seven strategically important target market, the agency noted. Sika will double its sales from the mortar products offering, S&P said, and gain further distribution and mortar technology capabilities.

But the construction chemicals industry is highly fragmented and Sika will continue to contribute to consolidation of the industry, the agency said.

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