Moody's may up EDS, affirms Hewlett-Packard

Moody's affirmed Hewlett-Packard's A2 long-term and prime-1 short-term ratings following news that it plans to buy Electronic Data Systems for about $13 billion in cash.

Moody's also placed the Baa3 long-term ratings of EDS under review for upgrade.

Both boards have OK'ed the deal, which still is subject to standard closing conditions. It is expected to close during the second half of 2008.

The review of EDS will focus on the legal structure post closing and whether Hewlett-Packard will guarantee the debt of EDS, Moody's said.

The ratings remain supported by Hewlett-Packard's diversified, leading and defensible market positions throughout a range of computing hardware and information technology businesses, the agency said. Hewlett-Packard shows solid and consistent earnings and operating cash flow, all of which contribute to expectations of continued strong pro forma debt protection measures and an excellent liquidity profile, Moody's said.

The proposed acquisition will increase its financial leverage, the agency said, but Hewlett-Packard has sufficient flexibility within the context of its existing ratings to fund the transaction and maintain ongoing share repurchase and dividend programs.

© 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.