15th Dec 2020 22:01
(Alliance News) - Moody's Investor Services late Tuesday lowered its outlook on AstraZeneca PLC to negative following the drugmaker's hefty deal to acquire Alexion Pharmaceuticals Inc.
Moody's affirmed AstraZeneca's A3 senior unsecured ratings and P-2 short-term commercial paper rating. However, the ratings agency said the outlook for AstraZeneca has been changed to negative from stable following the Anglo-Swedish drugmaker's deal to acquire Alexion Pharmaceuticals.
Over the weekend, AstraZeneca said it was buying US biotech firm Alexion for USD39 billion to boost its work on immunology. Both boards have agreed to the cash-and-stock deal, which values Alexion at USD175 a share, a premium of 45% to the Boston-based company's closing price on Friday in New York of USD120.98.
Moody's said the rating action incorporates governance considerations such as Moody's expectation that the acquisition of Alexion and the higher ensuing leverage would lead to continued competition between AstraZeneca's capital allocation priorities, including deleveraging through debt reduction and its ambition to increase the dividend over time.
The agency said these actions creates "some uncertainty" around the FTSE 100-listed firm's deleveraging path.
"Today's outlook change to negative reflects the expected delay in AstraZeneca's deleveraging by about a year as a result of the proposed acquisition of Alexion and the risk that Moody's-adjusted gross debt/EBITDA may not sustainably reduce to below 3.0 times by the end of 2022," Moody's analyst Frederic Duranson said.
The stock closed down 2.4% at 7,505.00 pence on Tuesday.
By Arvind Bhunjun; [email protected]
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