S&P shifts PerkinElmer view to negative

S&P said it revised PerkinElmer Inc.’s outlook to negative from stable but affirmed its BBB ratings on the company and its senior unsecured debt.

PerkinElmer agreed to buy BioLegend, for roughly $5.25 billion, which it will fund through a mix of debt and roughly $2.2 billion in equity.

“The negative outlook reflects risk to our base expectation that leverage could remain elevated following the acquisition. We expect leverage to be about 3.6x in 2022 reducing to about 2.8x by 2023, given projected discretionary cash flows of more than $500 million per year and that management will use much of its discretionary cash flow to reduce leverage over the next few years. The company has publicly committed to a net leverage target of below 3x over the next 18 to 24 months. However, with limited capacity in the current rating, the negative outlook reflects the possibility of a downgrade should the company pursue more aggressive debt-funded acquisitions or if it experiences a more-than-expected decline of the pandemic-related demand,” S&P said in a press release.

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