S&P Revises Ratings Watch Implications for CST Brands (CST) to Positive Amid M&A Deal

August 22, 2016 2:22 PM EDT

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S&P Global Ratings revised the CreditWatch implications on CST Brands Inc. (NYSE: CST) to positive from developing. The corporate credit rating remains 'BB'.

"The CreditWatch revision follows CST Brands' announcement that it has entered into a definitive agreement to be acquired by its Canadian-based peer Alimentation Couche-Tard (see our research update, "Alimentation Couche-Tard Inc. Outlook To Stable From Positive On Merger Plan With CST Brands Inc.; Affirmed At 'BBB'", Aug. 22, 2016). The estimated transaction value is $4.4 billion, which we understand include the assumption of debt. Both companies expect the transaction to close by early calendar year 2017," said credit analyst Andy Sookram.

Upon availability of transaction details, we will review the ratings for upgrade potential. The magnitude of ratings uplift would depend on a number of items including whether any material amounts of outstanding debt remains in place at CST Brands and Alimentation Couche-Tard provides any credit enhancement, as well as our view of the importance of CST Brands in the combined entity.

If all of CST Brands' debt is assumed by Alimentation Couche-Tard or fully repaid at transaction closing, we could withdraw our ratings on the company while on CreditWatch.



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