S&P affirms Abbott

Standard & Poor's said it affirmed Abbott Laboratories' AA long-term corporate credit rating, AA senior unsecured debt rating and A-1+ short-term debt rating following the company's agreement to buy the vascular businesses of Guidant Corp. (A-/positive watch/A-2) for $3.8 billion if Boston Scientific Corp.'s (A/negative watch/A-1) $25 billion bid for Guidant is successful.

The outlook is stable.

In addition to the direct purchase price of $3.8 billion, Abbott agreed to loan Boston Scientific $700 million and make as much as $500 million in milestone payments if a drug-eluting stent, currently under development, is approved for marketing in the United States and Japan, according to the agency. As Boston Scientific is competing with rival Johnson & Johnson (AAA/stable/A-1+) to purchase Guidant's cardiac rhythm management assets, Abbott's purchase is still uncertain.

The affirmation reflects S&P's view that Abbott has the capacity and discipline to restore its financial profile over the next two years. The superior, investment-grade ratings on the company reflect its solid positions in a number of diverse health care segments, its strong financial profile and its continued robust discretionary cash flow.

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