US retailer Del Monte has been downgraded by an international ratings agency just a week after acquiring the brand and assets of pet snack company Milk-Bone from Kraft Foods.

Fitch Ratings has revised its ratings outlook for both Del Monte Food Company, and Del Monte Corporation, from Stable to Negative.

Fitch said in a statement that it does view last week’s (16 March) addition of Milk-Bone pet snacks to Del Monte’s portfolio, for approximately US$580m, as a strategic positive because it should expand overall margins while strengthening the company’s position in a high growth category.

But the statement continued: “As a 100% debt-financed transaction, however, this purchase in combination with the recently announced Meow Mix Holdings acquisition materially increases Del Monte’s leverage. In addition, the lack of material synergies and incremental marketing spend required to support the brand is expected to limit significant near-term improvement in operating cash flow.”

The ratings agency also said that prior to the announced acquisitions of Milk-Bone and Meow Mix Holdings, Del Monte’s credit metrics were showing noticeable improvement.

Del Monte Food Company today (20 March) declared a cash dividend on its common stock of US$0.04 per share – payable on 4 May to stockholders of record as of 20 April.