...Negative Outlook: The revision of the Outlook to Negative in June 2015 reflects the combination of heightened litigation risks and already stretched credit metrics beyond levels compatible with British American Tobacco plc.'s (BAT) rating. This follows three M&A transactions: a capital contribution to Reynolds American Inc (RAI); a tender offer to acquire the remaining 24.7% share the company does not own in Souza Cruz; and the acquisition of TDR d.o.o. for up to GBP5.5bn in total. It is also due to Fitch Ratings' assumption of continued currency headwinds in 2015. No Rating Headroom: Fitch's projected 2015 leverage in the event of all M&A transactions completing as planned leaves no headroom for further material M&A, other corporate actions or share buybacks over 2015 and 2016. Fitch calculates that the acquisition funding will lead to a deterioration in BAT's credit metrics, with funds from operations (FFO) adjusted net leverage reaching approximately 3.6x to 3.9x this year, up from an...
