MARKET DEVELOPMENT
Sime Darby's Acquisition Of NBPOL Is Credit Positive, Says Moody's
Sime Darby's Acquisition Of NBPOL Is Credit Positive, Says Moody's
16/10/2014 (Bernama) - Sime Darby Bhd's proposed acquisition of the entire shares of New Britain Palm Oil Ltd (NBPOL) would be credit positive, said Moody's Credit Outlook.
The ratings agency said it was of the view that the acquisition would increase Sime Darby's operational scale, geographical mix of palm oil sources, be immediately accretive to earnings before interest, taxes, depreciation, and amortisation and enhance its European sales channel.
"The addition of NBPOL's plantations would increase Sime Darby's 525,290 hectares of oil palm plantations by 15 per cent to 605,174 hectares, and widen its competitive advantage," it said in article released today.
The addition of NBPOL's plantations will also reduce Sime Darby's reliance on Malaysia and result in a portfolio of plantations that are well balanced between domestic and overseas sources (51:49), Moody's added.
Sime Darby, which is currently rated 'A3 stable' by Moody's, announced the RM6.47 billion proposed acquisition of NBPOL last Thursday.
"We also expect Sime Darby to maintain its financial prudence.
"Although the company held cash of RM4.4 billion at end-June, it is only committing some of this to the NBPOL purchase to retain liquidity and cover the short-term
The ratings agency said it was of the view that the acquisition would increase Sime Darby's operational scale, geographical mix of palm oil sources, be immediately accretive to earnings before interest, taxes, depreciation, and amortisation and enhance its European sales channel.
"The addition of NBPOL's plantations would increase Sime Darby's 525,290 hectares of oil palm plantations by 15 per cent to 605,174 hectares, and widen its competitive advantage," it said in article released today.
The addition of NBPOL's plantations will also reduce Sime Darby's reliance on Malaysia and result in a portfolio of plantations that are well balanced between domestic and overseas sources (51:49), Moody's added.
Sime Darby, which is currently rated 'A3 stable' by Moody's, announced the RM6.47 billion proposed acquisition of NBPOL last Thursday.
"We also expect Sime Darby to maintain its financial prudence.
"Although the company held cash of RM4.4 billion at end-June, it is only committing some of this to the NBPOL purchase to retain liquidity and cover the short-term