28th Jan 2016 16:06
LONDON (Alliance News) - Pharmaceutical giant Shire PLC Thursday was assigned investment grade credit ratings by Moody's Investor Service and Standard & Poor's, both with 'stable' outlooks.
Shire revealed earlier this month its USD32.0 billion deal to acquire US-based Baxalta, financed through equity and an USD18.0 billion fully underwritten bank facility. Shire intends to refinance the facility, which lasts for one year and can be extended at the company's option for a further year, with debt issued on the capital markets.
The credit ratings provide Shire with access to a "wide range" of funding sources, the Dublin, Ireland-based company said.
"The financing of our combination with Baxalta was structured with the intention of maintaining investment grade ratings for the combined entity. We are delighted that by assigning Shire an investment grade rating, the agencies have recognised our strong business profile enhanced by the pending acquisition of Baxalta," said Shire's Chief Financial Officer Jeff Poulton in a statement.
Standard & Poor's said it had assessed the business risk profile of the combined entity as "satisfactory" and its financial risk profile as "significant." Standard & Poor assigned a 'BBB-' long term corporate credit rating and 'A-3' short term corporate credit rating to Shire.
"Although Baxalta's current EBITDA margin is lower than Shire's, we estimate that Shire will be able to realize operational efficiencies to restore its margins at least to the pre-merger levels," Standard & Poor's said.
Moody's Investors Service assigned an issuer rating of Baa3 to Shire; with a stable rating outlook.
"Shire's investment-grade rating reflects strong business fundamentals including high barriers to entry and a healthy growth outlook, offset by an aggressive acquisition appetite and high financial leverage," said Moody's Senior Vice President Michael Leveque in a statement.
Shares in Shire were down 5.3% at 3,834.00 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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