S&P: King Pharma on positive watch

Standard & Poor's said it placed its BB corporate credit, BB senior secured, and BB- senior unsecured ratings of King Pharmaceuticals Inc. on CreditWatch positive.

The placement follows the announcement that King would be acquired by unrated Mylan Laboratories for about $4 billion in Mylan stock.

S&P said the acquisition would meaningfully diversify Mylan's generic drug business, boosting its branded pharmaceuticals segment with King's specialty drug products. Mylan has no debt, and the combined firm should benefit from a broader product and cash flow base, suggesting moderate improvements in credit measures from those for King alone: Estimated funds from operations to total debt could increase to almost 80% from about 70%.

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