Fitch puts St. Jude on watch

Fitch Ratings said it placed St. Jude Medical, Inc.’s ratings on negative watch following its announced intention to acquire Thoratec Corp. for about $3.4 billion.

This is an all-cash transaction, Fitch said, adding that it believes any downgrade would be limited to one-notch, if the acquisition is completed under the current proposed terms.

The agency said it believes the company’s intended acquisition is strategically constructive and provides an adjacent product platform to its cardiovascular business, as well as an expansion of its treatment offerings for heart-failure patients.

Fitch said the acquisition will likely increase St. Jude’s total debt-to-EBITDA in the intermediate term, which is already stressed for the company’s A rating.

The stabilizing domestic cardiac rhythm management market, new product introductions and emerging market opportunities should support some organic revenue growth for the company during 2015 and beyond, the agency said.

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