Fitch may cut Boston Scientific; Guidant view evolving

Fitch Ratings said it has placed Boston Scientific Corp. on Rating Watch negative following the company's announcement that it has launched an unsolicited offer to purchase Guidant Corp. for $25 billion, or $72 per share.

Fitch's ratings on Boston Scientific BSX include an A issuer default rating, A senior unsecured notes rating, A unsecured bank credit facility rating and F1 commercial paper rating.

Concurrently, Fitch has revised Guidant Corp.'s Rating Watch to evolving from positive. The company's previous Rating Watch reflected the positive credit implications of being acquired by Johnson & Johnson (AAA). Conversely, success of the competing bid from Boston Scientific would likely lead to Guidant's ratings being downgraded as a result of being acquired in a transaction including a large debt component, the agency said.

Fitch's ratings on Guidant include an A- issuer default rating, A- senior unsecured notes rating, A-unsecured bank credit facility rating and F2 commercial paper rating.

The proposed transaction is expected to be funded with 50% in new Boston Scientific equity and 50% in cash, the agency said. At Sept. 30, Boston Scientific had $917 million in cash, and Guidant had $2.7 billion.

Fitch said it recognizes several compelling aspects of the proposed transaction, including the potential diversification of Boston Scientific revenue and earning streams stemming from access to Guidant's fast-growing cardiac rhythm management business and the access to a second drug-eluting coronary stent program to complement Boston Scientific 's Taxus stent

Boston Scientific's ratings reflect the company's strong credit profile and favorable strategic positions in several established and emerging technologies, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.