Moody’s reviews Hill-Rom

Moody's Investors Service said it placed Hill-Rom, Inc.'s Baa3 senior unsecured rating under review for downgrade following the company's announcement that it entered into an agreement to acquire Welch Allyn for about $2.05 billion. The acquisition is expected to close by the end of September 2015.

"The acquisition of Welch Allyn will more than triple Hill-Rom's debt, and significantly increase its financial leverage," Moody’s vice president and senior analyst John Zhao said in a news release.

"The acquisition will increase Hill-Rom's scale and product diversity and reduce its reliance on more volatile capital equipment sales to hospitals. However the incremental debt and associated interest expense will substantially weaken Hill-Rom's credit metrics such that they will no longer be supportive of an investment grade rating."

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