Nestle SA, 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.