S&P mulls possible downgrade of Dow Chemical
Thursday July 10, 2:02 pm ET
S&P mulls possible downgrade of Dow Chemical, after it reveals plan to buy rival Rohm & Haas
NEW YORK (AP) -- Standard & Poor's Ratings Services on Thursday placed the ratings of Dow Chemical Co. on CreditWatch with negative implications, after the company agreed to buy rival chemical maker Rohm and Haas Co. for more than $15 billion in cash.
CreditWatch with negative implications means the company has a 50 percent chance of being downgraded in the next three months.
"Based on the preliminary information announced today, Dow's financial profile will clearly move to a more aggressive posture, but we expect it to be maintained at a level sufficient to support an investment-grade rating," S&P said.
S&P currently holds a "A-" corporate credit rating on Dow Chemical.
S&P also placed the long-term debt ratings of Rohm and Haas on CreditWatch with developing implications. This means S&P will consider a possible downgrade, upgrade, or affirmation of the company's ratings within the next three months as it reviews the deal with Dow.
S&P has a "BBB" corporate credit rating on Rohm and Haas, which is two notches above non-investment or "junk" status.
The ratings agency said it will also consider lowering or affirming Rohm and Haas' short-term debt ratings.
Shares of Dow Chemical lost $1.15, or 3.4 percent, to $32.81 in afternoon trading, after earlier setting a new 12-month low of $31.72. Rohm and Haas shares leaped $29.25, or 65 percent, to $74.08, just shy of the $78 per share offering price.
Source: Associated Press
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