The ratings agency says that its BB long-term issuer credit rating on Fisher & Paykel Finance have been placed on CreditWatch with positive implications, following Haier issuing its takeover notice.
Haier already owns a stake in Fisher and Paykel Appliances and has a lock-up agreement with a large shareholder, which takes its potential interest to 37.46%. This gets it closer to the 50% required for the offer to proceed.
The $1.20 a share cash offer is at a significant premium to the pre-existing share price, and F&P Appliance's independent board is supportive of Haier’s offer on the following basis:
The above-mentioned events raise the likelihood of offer acceptance, S&P says.
Should the takeover offer succeed, our rating on F&PFL may be raised to ‘BB+’, which would be a level consistent with the stand-alone credit profile (SACP). This is because we believe that the takeover is likely to result in an improvement in the credit profile of F&PAHL. The rating on F&PFL is currently constrained by our view that the company may only be rated up to a limit better than the credit profile of its parent.
In our view, F&PFL is likely to remain a non-strategic subsidiary of Haier Electronics. As a result, we do not expect the rating on F&PFL to receive any uplift from parent support. Additionally, we also consider that there is a small risk that the takeover could result in the weakening of F&PFL’s SACP, for example due to Haier Electronics deciding to maintain a weaker capitalization at F&PFL. Nevertheless, in our view, the risk of such a development is remote, due to its potential impact on F&PFL’s business or any future divestiture plans.
Although less likely, if the takeover becomes likely to not proceed then we are likely to affirm all ratings and remove F&PFL from Credit Watch positive.
Standard & Poor’s expects the Credit Watch to be resolved after we review F&PAHL’s credit profile following the completion of the takeover process.
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