S&P puts Merck on watch

Standard & Poor's said it placed its BBB+/A-2 corporate credit ratings on Merck KGaA on CreditWatch with negative implications, following its unexpected takeover of Serono SA for a €10.6 billion.

At the same time, the long-term A- corporate credit rating on Serono was placed on CreditWatch with negative implications, the agency said.

S&P added that the rating action mainly reflects the deterioration in the combined group's financial profile, adding that while the financing structure includes an equity share of between €2 billion and €2.5 billion, the acquisition entails a significant portion of debt funding, resulting in materially higher leverage than is currently the case.

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