Fitch puts CFR Pharmaceuticals on negative watch

Fitch Ratings said it placed the ratings of CFR Pharmaceuticals SA on Rating Watch negative.

The ratings on negative watch include its BBB- foreign- and local-currency issuer default rating, A(cl) long-term national scale rating, A(cl) rating on local bonds N-730 and N-731 and BBB- rating on the $300 million senior unsecured notes of CFR International SpA.

The negative watch follows news that CFR made a non-binding offer to purchase 100% of Adcock Ingram Holdings Ltd. for $1.3 billion, Fitch said.

If successful with this acquisition, CFR's business profile would improve with broader geographic and product diversification, the agency said.

On a pro forma basis, South Africa would become the company's most important market, accounting for about 41% of CFR's revenues, Fitch said.

Key risks include the rapid pace of acquisitions at CFR, as well as the increasing size of its targets, which may dilute management's ability to quickly obtain synergies and quickly return its capital structure to targeted leverage levels of 2x to 2.5x, the agency said.

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