S&P puts Jazz Pharmaceuticals on watch

S&P said it placed all its Jazz Pharmaceuticals plc ratings on CreditWatch with negative implications.

The CreditWatch placement follows Jazz Pharmaceuticals’ announcement to acquire GW Pharmaceuticals plc for about $7.2 billion, the agency said. Jazz intends to fund this with a mix of debt, cash, and equity shares.

The acquisition would significantly increase Jazz’s S&P adjusted leverage, for which the agency does not net cash, to above 5x from the current 2.2x, and leverage will likely remain elevated for the next two years, S&P said.

The CreditWatch placement reflects the expectation that at the transaction’s close, S&P would lower the ratings by one notch, given the material addition of debt and the increased risk of elevated leverage for the next 12 to 18 months, the agency said.

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