S & P lowers Merck ratings due to Millipore deal
Standard & Poor's Ratings Service has lowered two ratings for Germany's Merck KGaA after the company announced it will buy biotech equipment maker Millipore Corp.
S&P said Tuesday it lowered long-term corporate credit and senior unsecured debt ratings for the maker of pharmaceuticals and specialty chemicals to 'BBB+' from 'A-.' The new ratings remain investment grade.
The ratings service also reaffirmed its short-term rating of A-2. The outlook is stable.
Merck said Sunday it will buy Millipore in a deal valued at $7.2 billion that is expected to close later this year.
S&P said in a statement it anticipates that "Merck's debt protection metrics will be significantly weaker for the next three years."
S&P also said Tuesday it affirmed its 'BB+' corporate credit rating on Millipore, with a positive outlook. That rating will be withdrawn once the deal is completed.
"Approximately 90 (percent) of the company's sales are consumables, lending some stability to Millipore's top line," S&P said in a separate statement on the Billerica, Mass., company.
Ratings on Millipore's individual debt issues will be raised to Merck's level or will be withdrawn if Merck refinances them.