Moody's puts Eisai on downgrade review

Moody's Investors Service said it placed the Aa3 issuer rating of Eisai Co., Ltd. under review for possible downgrade.

This action is in response to news that Eisai reached a definitive merger agreement with MGI Pharma, Inc., under which Eisai would acquire all of MGI's outstanding shares for $41 per share in an all-cash transaction, for a total of about $3.9 billion. Eisai intends to finance the deal with debt and existing internal financial resources.

Moody's noted that the transaction would significantly strengthen Eisai's product portfolio and pipeline in the oncology area, which is in line with the company's strategic plan. The deal also could help mitigate the patent expiration risk of its major products in the U.S. market, Moody's said.

The review will focus on the impact of the merger on Eisai's competitiveness, business and research and development strategy. Moody's said it also will evaluate Eisai's financial policy and assess the possibility of Eisai's rating being downgraded by multiple notches if the transaction is completed.

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