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Moody's affirms Kyphon, may lower Medtronic
Moody's Investors Service said it placed Medtronic, Inc.'s A1 senior unsecured notes and bank facility and Prime-1 short-term rating under review for possible downgrade following the company's announcement that it plans to acquire Kyphon, Inc. for $3.9 billion including current debt.
The agency also affirmed Kyphon's B1 corporate family and probability-of-default ratings and Ba1 (LGD2, 15%) secured bank revolver, but expects that these ratings would be withdrawn at the closing of the transaction.
"Kyphon's unique spinal products bring growth prospects and potential synergies to Medtronic. However, until financing plans are clearly articulated, Moody's assumes that Medtronic's debt could increase to levels that no longer meet our expectations for an A1 rating," Moody's senior credit officer Diana Lee said in an agency rating.
The review will primarily focus on the form of financing for the acquisition, any potential changes to Medtronic's financial policies and the potential synergies and integration issues related to the acquisition.
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