UPDATE 2-Boskalis to fund Smit bid with cash, debt

(Adds analyst comment, updates share price)

By Foo Yun Chee

AMSTERDAM, Oct 2 (Reuters) - Dutch dredger Boskalis Westminster NV (BOSN.AS) intends to fund its planned 1.1 billion euro ($1.5 billion) offer for Smit Internationale with cash and debt, it said on Thursday, allaying market fears of a share issue.

"We have indicated that it will not be funded through an issue of new shares. It will be through available cash on the balance sheet and new debt," said spokesman Martijn Schuttevaer.

He said Boskalis, the world's largest dredger, would not have announced its planned bid for maritime services company Smit (SMTNc.AS) on Sept. 15 if it was uncomfortable with its financing.

Boskalis shares were down 3.8 percent at 32.79 euros by 0905 GMT. Earlier, the stock lost as much as 7.9 percent on market fears that Boskalis may issue shares to finance a bid.

Smit, which has rejected the bid saying it undervalued the company, was up 2.2 percent to 62.70 euros, just above Boskalis' planned all-cash offer of 62.50 euros per share.

Boskalis, which has built up a 20 percent stake in Smit, has until Oct. 13 to inform the market of its next step according to stock market regulations, Schuttevaer said.

Asked if Boskalis planned to buy more Smit shares, he said: "If we cross the next threshold, we will be obliged to report it."

Analysts expressed doubts on the strategic benefits of a Smit takeover.

"We can imagine the potential deal at 62.50 euros to be earnings per share accretive and perhaps slightly value accretive. The strategic rationale however seems less obvious as we have difficulties in identifying synergies," said Rabo Securities analyst Michael Roeg.

He said there was a possibility that Boskalis would need to increase its offer to 70 euros per share to succeed, which in turn would push down value creation for such a deal to zero. (Reporting by Foo Yun Chee; Editing by David Holmes and Sharon Lindores)