Research Update: Inner Mongolia Yili Industrial Group Ratings Outlook Revised To Negative On Acquisition Push; 'A-' Rating Affirmed

China-based dairy maker Inner Mongolia Yili Industrial Group Co. Ltd. (Yili) plans to acquire Ausnutria Dairy Corp. Ltd. (Ausnutria), for a maximum consideration of Chinese renminbi (RMB) 11.6 billion. The acquisition will be done in two phases and mostly funded with debt, and we assume the transaction could materially increase Yili's debt-to-EBITDA ratio to above 1.5x from 1x, where it was as of June 2021. On Nov. 2, 2021, S&P Global Ratings affirmed its 'A-' long-term issuer credit rating on Yili. We also affirmed the 'A-' issue rating on the senior unsecured notes. The negative outlook reflects our view that Yili's debt leverage could exceed our leverage threshold of 1.5x due to a combination of increased appetite for acquisitions and

...- China-based dairy maker Inner Mongolia Yili Industrial Group Co. Ltd. (Yili) plans to acquire Ausnutria Dairy Corp. Ltd. (Ausnutria), for a maximum consideration of Chinese renminbi (RMB) 11.6 billion. - The acquisition will be done in two phases and mostly funded with debt, and we assume the transaction could materially increase Yili's debt-to-EBITDA ratio to above 1.5x from 1x, where it was as of June 2021. - On Nov. 2, 2021, S&P Global Ratings affirmed its 'A-' long-term issuer credit rating on Yili. We also affirmed the 'A-' issue rating on the senior unsecured notes. - The negative outlook reflects our view that Yili's debt leverage could exceed our leverage threshold of 1.5x due to a combination of increased appetite for acquisitions and a greater willingness to fund these deals with debt....

Research Update