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MAI’s Albaugh deal impacts credit rating

Makhteshim-Agan Industries’ (MAI) credit rating has been placed on “credit watch with negative implications”. The agency, Standard & Poor’s, made the move because of MAI’s agreeing to acquire the US business, Albaugh ( Agrow No 595, p 2). The agency notes that the acquisition would be “liable to have negative implications” on MAI’s rating, due to: a “significant increase” in net debt and “exposure to a single product”, the herbicide, glyphosate; greater exposure to South American markets; lower profitability; and the “large” size of the “merger”. However, the agency notes MAI’s competitive position would be enhanced. The acquisition would include $280 million of debt. It is subject to due diligence, and expected to be completed this year.

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