Research Update: Brazilian Auto Supplier Tupy Outlook Revised To Positive On Acquisition Of Teksid's Assets, 'BB' Ratings Affirmed

On July 1, 2021, Brazil-based auto supplier Tupy S.A. announced the acquisition of Teksid's Brazilian and Portuguese cast iron components operations from Stellantis N.V. for an enterprise value of €67.5 million. The final transaction has a more limited scope than what was announced in December 2019, after discussions with the U.S. antitrust authorities. Still, we believe that the acquired assets will result in a considerable growth in scale and geographic diversification, and potential for synergies that will likely strengthen the company's competitive position and future cash flow prospects. As a result, we revised our outlook on Tupy to positive from stable and affirmed our 'BB' issuer credit and issue-level ratings. We also affirmed our national scale rating at 'brAAA' and

...- On July 1, 2021, Brazil-based auto supplier Tupy S.A. announced the acquisition of Teksid's Brazilian and Portuguese cast iron components operations from Stellantis N.V. for an enterprise value of 67.5 million. - The final transaction has a more limited scope than what was announced in December 2019, after discussions with the U.S. antitrust authorities. - Still, we believe that the acquired assets will result in a considerable growth in scale and geographic diversification, and potential for synergies that will likely strengthen the company's competitive position and future cash flow prospects. - As a result, we revised our outlook on Tupy to positive from stable and affirmed our '##' issuer credit and issue-level ratings. We also affirmed our national scale rating at 'brAAA' and kept the recovery rating of '3' (65%) unchanged. - The positive outlook on the global scale ratings indicates a possible upgrade in the next 12-18 months if the company is successful in the integration of the...

Research Update