Bulletin: Sandvik's Appetite For Mergers And Acquisitions Weighs On Its Financial Flexibility

PARIS (S&P Global Ratings) July 20, 2021--S&P Global Ratings today said that Sandvik AB (A-/Stable/A-2) can absorb the three tuck-in acquisitions it recently announced--computer-aided manufacturing software company Cambrio, precision metrology solutions provider DWFritz Automation, and Polish round tools producer Fanar. However, the acquisitions are to be paid with cash on hand and will significantly diminish Sandvik's financial flexibility in 2021, owing to the company's steep acceleration in mergers and acquisitions. We now believe that Sandvik's funds from operations to debt will be about 80%-90% in 2021, from a net adjusted cash position in 2020 of about Swedish krona (SEK) 1 billion. Our rating on Sandvik continues to be sustained by its solid free operating cash flow (FOCF) generation, which we

...July 20, 2021 PARIS (S&P Global Ratings) July 20, 2021--S&P Global Ratings today said that Sandvik AB (A-/Stable/A-2) can absorb the three tuck-in acquisitions it recently announced--computer-aided manufacturing software company Cambrio, precision metrology solutions provider DWFritz Automation, and Polish round tools producer Fanar. However, the acquisitions are to be paid with cash on hand and will significantly diminish Sandvik's financial flexibility in 2021, owing to the company's steep acceleration in mergers and acquisitions. We now believe that Sandvik's funds from operations to debt will be about 80%-90% in 2021, from a net adjusted cash position in 2020 of about Swedish krona (SEK) 1 billion. Our rating on Sandvik continues to be sustained by its solid free operating cash flow (FOCF) generation, which we see at about SEK11.5 billion¡SEK12.5 billion in 2021, virtually unchanged versus 2020. The acquisitions come after the already sizable purchase of DSI Underground for SEK9.5 billion...

Bulletin