Moody’s cautions European chemical firms over deals

Many European chemical makers have had their fill of acquisitions, according to Moody’s. The credit ratings agency says that after a spate of large acquisitions, a few chemical makers won’t be able to make any further acquisitions in the next 12 to 18 months without risking a credit downgrade. But companies may be tempted to make acquisitions anyway, according to Francois Lauras, Moody’s vice president and senior credit officer. “Pressure to continue acquisitions to boost future revenue and earnings growth is intense as firms struggle to grow organically post-2008,” he says. Large chemical companies that made big deals recently include Solvay, Evonik Industries, and Lanxess. However, Moody’s says a handful of other firms, including AkzoNobel, Covestro, and Arkema, have the balance sheets to make acquisitions without hurting their credit.