S&P downgrades Perrigo, debt to BBB-

Standard & Poor's said it lowered all of its ratings on Perrigo Co. plc, including the corporate credit rating to BBB- from BBB.

The outlook is stable.

Reported debt outstanding as of Dec. 31 was about $6 billion.

"The downgrade reflects our expectation for weakness in Perrigo's high-margin generic pharmaceutical business, largely resulting from intensifying competition and lower pricing, and a further expected decline in the recently acquired European branded consumer business," S&P credit analyst Gerald Phelan said in a news release.

"As a result, we now forecast adjusted debt-to-EBITDA in the mid-3x area over the next two years, which is significantly weaker than our previous forecast of debt-to-EBITDA between 2.5x-3.0x. Moreover, we view the departure of Perrigo's long-time CEO as a negative, as it comes after the second negative earnings announcement over the last few months.

“In our view, the acquisition misstep in Europe and negative earnings developments have, at least temporarily, diminished investors' trust in the company's management, especially after its stockholders' vote in favor of Perrigo's management in the face of Mylan's hostile takeover attempt last year. As a result, we believe Perrigo will continue to prioritize shareholder-friendly actions, including share buybacks, over strengthening the balance sheet, in order to buoy its share price," Phelan said in the release.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.