S&P: Schering-Plough on watch

Standard & Poor's said it placed its ratings on Schering-Plough Corp., including the A- long-term and A-2 short-term corporate credit ratings, on CreditWatch with negative implications, following the company's announcement that it is planning to acquire Organon BioSciences from Akzo Nobel for $14.4 billion.

The acquisition will add a significant amount of debt and Schering-Plough's financial profile will be inconsistent with the current ratings, the agency noted.

However, S&P said it expects that the company will likely fund the acquisition with a significant component of equity and work to quickly restore its financial profile.

Management has a demonstrated history of conservative financial policies and actions, which include the maintenance of a significant net cash position, the slashing of the dividend and the issuance of hybrid securities over the past several years, the agency added.

Considering the strength of Schering-Plough's business profile, S&P said it believes that the corporate credit rating has the potential to remain at the investment-grade level.

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