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S&P puts Tyco on watch on merger news
Standard & Poor’s said it placed the A- corporate credit rating on Tyco International plc on CreditWatch with negative implications.
The agency also said it placed the BBB+ ratings on the company’s unsecured debt on CreditWatch with developing implications.
The agency also said it affirmed the company’s A-2 short-term rating.
The company recently announced a merger with Johnson Controls Inc.
Under the terms of the agreement, Johnson Controls’ shareholders will own 56% of the equity of the combined company and receive a cash consideration of about $3.9 billion, while Tyco’s shareholders will own about 44% of the equity of the combined company, S&P said.
Tyco will incur additional debt to fund this transaction and has secured a $4 billion committed facility, the agency said.
The company’s pro forma debt-to-EBITDA ratio will likely be in the 2x to 3x range.
S&P also said it expects to resolve the CreditWatch placement once more details on the proposed legal structure of the combined entity are released and the notching implications for Tyco’s existing debt can be reassessed.
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