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Moody’s rates St. Jude notes, loans Baa2
Moody's Investors Service said it assigned a provisional Baa2 rating to the proposed note offering of St. Jude Medical, Inc. and a provisional Baa2 to its newly established bank credit facilities.
The outlook is expected to be negative.
Proceeds will largely be used to fund the $3.4 billion acquisition (net of acquired cash) of Thoratec Corp., which management expects to close in the fourth quarter of 2015.
All of St. Jude's existing Baa1 senior unsecured ratings remain under review for downgrade and its Prime-2 rating is affirmed.
Moody's anticipates that when the acquisition closes, all of St. Jude's unsecured ratings will be downgraded to Baa2, with a negative outlook. At that time, the rating on the proposed note offering and new bank facilities will be converted from provisional Baa2 to Baa2.
"Thoratec will broaden St. Jude Medical's presence in heart failure therapies, but the acquisition will significantly raise its leverage and is richly-priced," Moody's vice president and senior credit officer Diana Lee said in a news release.
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