MONTERREY, Mexico--(BUSINESS WIRE)--The ratings for Elementia, S.A. de C.V. (Elementia) are unaffected by the company's recently announced acquisition agreement, according to Fitch Ratings. Elementia has agreed with the Exterior Products Division of Saint Gobain to acquire the fiber cement business of its affiliate Certain Teed Corporation for an undisclosed amount. The transaction is subject to approval of regulatory authorities, with expected closing during the first quarter of 2014.
Fitch believes that this acquisition would be financed by Elementia's internal resources, and hence the transaction would not have a material impact on the company's financial position. As of Sept. 30, 2013 Elementia had MXN2.2 billion in cash and marketable securities. Recently, Elementia also announced the sale of its 20% stake in Grupo Cuprum , S.A.P.I. de C.V. (Cuprum). Fitch expects Elementia's available cash and the inflows related to the Cuprum transaction, to strengthen Elementia's financial profile. Fitch believes net-debt-to-EBITDA will be below 3.0x at year-end 2013. Fitch expects Elementia's net leverage in the medium term to be in the range of 1.5x and 2.0x, considering current operations and assuming the proposed transaction takes place.
If the transaction is concluded favorably, Elementia could achieve operational synergies by having local manufacturing facilities in the U.S. that would complement the company's current commercial activities of its product portfolio in the country and increase its market presence.
Elementia's ratings reflect its strong business profile characterized by geographic and product line diversification, leading market shares in the regions where it has presence supported by highly recognized brands and a well-developed distribution network, stable operating results and its shareholders' strength. Factors that limit Elementia's ratings are the company's still high leverage, industry cyclicality, input costs volatility and environmental regulation.
Fitch currently rates Elementia as follows:
--Long-term Issuer Default Rating (IDR) 'BB+';
--Long-term Local Currency IDR 'BB+';
--Long-term National Scale Rating 'A+(mex)'.
The Rating Outlook is Stable
Additional information is available at 'www.fitchratings.com'.
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