HeidelbergCement BB+ confirmed on Italcementi deal - Fitch

US ratings agency Fitch has confirmed the 'BB+' rating on German cement maker HeidelbergCement (HC), with outlook stable, following the company's announced purchase of Italian peer Italcementi.

HeidelbergCement intends to finance the EUR4.3bn eal (including Moroccan minorities) with EUR800m in shares sold to the seller, EUR1bn in disposals, EUR800m in capex and working capital savings and the remaining EUR1.7bn through a combination of operational cash flow and additional debt.

"The affirmation reflects HC's improved scale, diversification, market positions and synergy potentials. HC's business profile, already compatible with an investment-grade rating, will benefit from Italcementi's complementary manufacturing footprint, established market positions and well invested asset base," Fitch said.

"We consider the Italcementi acquisition a temporary deviation from HeidelbergCement's historical commitment to reduce leverage and obtain an investment-grade rating. We expect pro-forma funds from operations (FFO) adjusted leverage to fall towards a level commensurate with the current ratings of 4.5x by end-2016," the agency said.