Moody’s revises JAB outlook to negative

Moody's Investors Service said it changed the outlook on JAB Holding Co. Sarl's Baa1 issuer rating and JAB Holdings BV's Baa1 senior unsecured bond ratings to negative from stable.

At the same time, the agency affirmed these ratings.

"Our decision to change the outlook on JAB's Baa1 rating to negative reflects the expected deterioration in its credit metrics and increased execution risks following its recently announced acquisition of Keurig. This weakly positions JAB within its Baa1 rating," Jeanine Arnold, Moody's vice president, senior analyst and lead analyst for the JAB, said in a news release.

The action follows JAB's Dec. 7 announcement that it entered into a definitive merger agreement, under which a JAB-led investor group will acquire Keurig Green Mountain, Inc. (unrated) for $92 per share in cash and a total equity value of roughly $13.9 billion.

Moody's expects that a significant portion of the purchase price will be funded by Keurig in the form of non-investment grade debt, but understands that the proposed acquisition will also materially increase the level of JAB's absolute debt.

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