The announced all-stock divestment of the off-patent Upjohn portfolio is set to bring $12 billion to Pfizer Inc. in debt planned to be raised by the new company, S&P Global Ratings said on Monday and revealed it slashed the pharmaceutical giant to AA- from AA. The company is still under review with negative implications, though the A-1 short-term grade wasn't changed, according to the update. The credit appraiser noted the assets in question, which make up for one fifth of revenues, would be combined into a majority-owned entity with Mylan NV constituting the rest.
The deal is "modestly negative" for the manufacturer based in New York in therapeutic diversification and scale but it should strengthen organic sales growth above competitors' performance, the report adds. It highlights the projection for adjusted leverage, seen at 2.5 times for this year, to decrease in 2020 "and generally remain below" the mark. The downgrade takes into account the earlier agreement to take over Array Biopharma, the rating agency said.
Pfizer's is more "aggressive" in financial policy terms "tolerant" of long-term net debt leverage remaining higher than two times, it added.
