S&P turns Amgen view to negative

S&P said it revised its outlook for Amgen Inc. to negative from stable and affirmed all its ratings, including the A- ratings on its senior unsecured notes.

Amgen plans to buy ChemoCentryx Inc. for $3.7 billion in cash, which the agency said lowers its capacity in the rating.

“While the acquisition adds a commercialized product in one of Amgen's core therapeutic areas, inflammatory disease, the company had limited capacity in the rating following the accelerated share repurchase of $6 billion earlier this year. We expect Amgen to continue looking for acquisitions and will spend $2 billion-$4 billion annually on them. Absent acquisition activity, we expect Amgen to repurchase shares. However, recently the company's pace of acquisitions has trended on the high end of that range, and with biotech valuations somewhat lower, there could be incrementally more activity over the next two years, keeping leverage elevated,” S&P said in a press release.

The dimmer outlook reflects the reduced capacity in the A- rating and a possible downgrade if leverage stays above 2.5x for an sustained period, the agency said.

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