CANADA: DBRS confirms Nestle Capital Canada Ltd. at R-1 (high)
Nestle Capital Canada Ltd. (based on the support agreement from Nestle S.A. "Nestle" or "the Company"), is confirmed at R-1 (high) with a Stable trend following today's announcement that the Company has entered into an agreement to acquire Ralston Purina Company ("Ralston") for a total purchase price of US$11.7 billion. Nestle's financial strength has been very strong with cash flow exceeding net debt levels for the past three years and EBITDA interest coverage rising to over 11 times in F1999. However, the acquisition is being largely debt financed and will reduce Nestle's overall financial flexibility in the near term. During the past five years, Nestle has maintained net debt levels in the Sfr6 billion range but the Ralston acquisition will cause this to rise significantly. The Company typically produces a high level of free cash flow (Sfr3.0 billion in F1999) and will discontinue share repurchases (Sfr2.3 billion in F1999), but it will take at least two years before net debt levels and cash flow to total debt recover back to historical levels. The recovery of financial strength could take longer as it is dependent upon strong earnings gains and a smooth integration of Ralston. Furthermore, the Company will likely continue to review all strategic acquisition opportunities as they arise.
Get full access to all content, just $1 for 30 days
A Message From The Editor
just-food gives you the widest food market coverage.
Paid just-food members have unlimited access to all our exclusive content - including 16 years of archives.
I am so confident you will love complete access to our content that today I can offer you 30 days access for $1.
It’s our best ever membership offer – just for you.
Dean Best, editor of just-food
- The key questions for digital strategists in 2017
- Unilever 2016 investor day - the top takeaways
- Wessanen's move for Spain's Biogran - analysis
- Burger King, Jollibee: foodservice focus, Nov 2016
- Have food promotions reached tipping point?
- General Mills jobs to go in business revamp
- Verlinvest, China Resources invest in Oatly
- B&G acquires pasta sauce group Victoria Fine Foods
- Tyson sets up US$150m investment fund
- Japan's Nagatanien buys Chaucer Food Group