Bulletin: Sandvik's Acquisition Appetite Has Eroded Its Financial Flexibility

PARIS (S&P Global Ratings) Nov. 23, 2021-- S&P Global Ratings today said that Sandvik AB's (A-/Stable/A-2) financial flexibility has materially diminished due to its increased acquisition appetite pushing up spending to record levels for 2021. As a result, we forecast its funds from operations (FFO) to debt will deteriorate to about 65%-75%, from a net adjusted cash position of about Swedish krona (SEK) 1.0 billion in 2020. Additionally, we believe that the company will not be able to sustain the same acquisition pace over 2022 without further weakening its leverage metrics. This could also signal a shift to a more aggressive leverage tolerance. The acquisition of U.S.-based round tools producer GSW Tool Intermediate Holdings LLC (GWS) Sandvik announced on Nov.

...November 23, 2021 PARIS (S&P Global Ratings) Nov. 23, 2021-- S&P Global Ratings today said that Sandvik AB's (A-/Stable/A-2) financial flexibility has materially diminished due to its increased acquisition appetite pushing up spending to record levels for 2021. As a result, we forecast its funds from operations (FFO) to debt will deteriorate to about 65%-75%, from a net adjusted cash position of about Swedish krona (SEK) 1.0 billion in 2020. Additionally, we believe that the company will not be able to sustain the same acquisition pace over 2022 without further weakening its leverage metrics. This could also signal a shift to a more aggressive leverage tolerance. The acquisition of U.S.-based round tools producer GSW Tool Intermediate Holdings LLC (GWS) Sandvik announced on Nov. 22, 2021, follows a series of midsize bolt-on acquisitions that took place in 2021. As a result, we lifted Sandvik's total acquisition spending for 2021 to about SEK30 billion, up from our previous forecast of SEK25...

Bulletin