Nestle Rating Leaves Room for $5.2 Billion of Acquisitions: S&P

Nestle SA (NESN), the world’s biggest food company, has room to spend more than 5 billion Swiss francs ($5.2 billion) on acquisitions under its current credit rating, according to Standard & Poor’s.

Debt-financed purchases beyond that amount could put the Vevey, Switzerland-based company’s AA long-term debt rating at risk, S&P said today, though it expects the DiGiorno pizza maker to spend only about 2 billion francs a year on acquisitions.

Nestle is “highly cash-generative” and has a “conservative financial policy,” said S&P, which assesses the outlook for the debt rating to be stable.

The maker of Nescafe soluble coffee last year bought Pfizer Inc.’s baby-food business for $11.9 billion.

AA is the third-highest credit rating on S&P’s scale, and Moody’s Investors Service rates Nestle debt Aa2.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net

To contact the editors responsible for this story: David Risser at drisser@bloomberg.net; Celeste Perri at cperri@bloomberg.net

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