Moody's drops LabCorp outlook to stable

Moody's Investors Service said it changed the outlook for Laboratory Corp. of America Holdings to stable from positive following the announcement that the company had entered into a definitive agreement to acquire Genzyme Genetics, a business unit of Genzyme Corp., in a cash transaction valued at $925 million.

Concurrently, Moody's said it affirmed LabCorp's Baa2 senior unsecured rating.

The change in outlook reflects Moody's expectation that LabCorp will be able to fund the contemplated transaction through a combination of available cash, revolver and new debt while maintaining credit metrics appropriate for the Baa2 rating category, the agency noted.

However, the additional leverage, interest cost and potential integration issues related to an acquisition of this size make a near term upgrade of the rating less likely, Moody's said.

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