Bulletin: Midea Group Co. Ltd. Ratings Unaffected By Proposed Takeover Offer For KUKA AG

HONG KONG (S&P Global Ratings) May 19, 2016--S&P Global Ratings said today that its ratings and outlook on Midea Group Co. Ltd. (A-/Stable/--; cnAA/--) are not affected by the company's proposed tender offer for KUKA AG (BB+/Stable/--). We believe Midea has ample financial resources to absorb the impact of the takeover, but the rating buffer for material acquisitions is significantly reduced by this potentially sizable transaction. We estimate that Midea's debt-to-EBITDA ratio is likely to increase to about 0.5x, from a net cash position as of Dec. 31, 2015. This assumes that the company will use only debt to fund the acquisition of all the outstanding shares of KUKA (it currently owns 13.5%) and the previously announced acquisition of Toshiba

...HONG KONG (S&P Global Ratings) May 19, 2016--S&P Global Ratings said today that its ratings and outlook on Midea Group Co. Ltd. (A-/Stable/--; cnAA/--) are not affected by the company's proposed tender offer for KUKA AG (##+/Stable/--). We believe Midea has ample financial resources to absorb the impact of the takeover, but the rating buffer for material acquisitions is significantly reduced by this potentially sizable transaction. We estimate that Midea's debt-to-EBITDA ratio is likely to increase to about 0.5x, from a net cash position as of Dec. 31, 2015. This assumes that the company will use only debt to fund the acquisition of all the outstanding shares of KUKA (it currently owns 13.5%) and the previously announced acquisition of Toshiba Lifestyle Products & Services Corp. As of Dec. 31, 2015, Midea has cash and cash equivalents of about Chinese renminbi (RMB) 40 billion and total debt of only about RMB4.4 billion. This is compared with a maximum cash consideration of about EUR4.0...

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