S&P: Sunoco view to negative

S&P said it revised the outlook on Sonoco Products Co. to negative from stable and affirmed all of its ratings on the company.

The negative outlook reflects the one-in-three potential that the agency will lower the ratings on Sonoco over the next two years because its proclivity for debt-funded acquisitions could result in a debt ratio of less than 35% for an extended period, S&P explained.

The company recently announced its intent to purchase Clear Lam Packaging Inc. for $170 million, the agency noted.

The acquisition continues the company's strategy of targeting the perimeter of the supermarket, where faster-growth fresh foods are sold, S&P said.

Sonoco's appetite for acquisitions has increased most recently as this transaction comes just three months after it acquired Peninsula Packaging for $230 million, the agency said.

The company's appetite for debt-funded acquisitions to enhance its growth may result in its inability to sustain credit measures commensurate with the ratings, S&P said.

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