S&P: Weichai on negative watch

S&P said it placed the BBB long-term corporate credit rating and cnA long-term Greater China regional scale rating on Weichai Power Co. Ltd. on CreditWatch with negative implications.

The agency also said it placed the BBB long-term issue rating and cnA long-term Greater China regional scale rating on the outstanding senior unsecured notes that Weichai guarantees on CreditWatch with negative implications.

The negative watch reflects a belief that Weichai’s financial strength will likely deteriorate materially following KION Group AG’s proposed acquisition of the entire shares in DH Services Luxembourg Holding Sarl (Dematic) for $2.1 billion, based on the enterprise value of $3.25 billion, S&P explained.

KION is a fully consolidated subsidiary of Weichai, the agency said.

The transaction is likely to be completed before the end of this year, S&P said, and is subject to regulatory and shareholder approval.

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