$0.03 (0.10%)
03:36PM (15 mins delay)
Nov 16, 2009 - 12:56 PM EST
Research Recap submits:
Moody’s estimates that Kraft’s (KFT) proposed offer for Cadbury’s (CBY) would push Kraft’s debt-to-EBITDA ratio above 4.0, weakening Kraft’s financial metrics beyond the typical bounds of a Baa2 rating. “Given its large global scale, strong cash flows and broad portfolio of household brands such as Oscar Mayer, Nabisco, and Maxwell House, Kraft’s rating can tolerate higher leverage than most of its peers’ – but within limits,” Moody’s writes in an Issuer Comment.
Beyond the balance-sheet implications of the proposed acquisition, we now question whether Kraft has put itself on a path of external growth through leveraged acquisitions.
Source: Seeking Alpha (Nov 16, 2009 - 12:56 PM EST)
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