S&P: Walgreens Boots view to stable

S&P said it revised the outlook on Walgreens Boots Alliance Inc. to stable from negative and affirmed its ratings, including the BBB corporate credit rating and A-2 short-term rating.

S&P said the outlook revision reflects the lower debt funding requirement for the revised acquisition, more manageable credit measures than under the original transaction (slightly more than 3 times debt to EBITDA versus about 4 times) and less integration risks associated with the smaller store base purchase.

The new asset purchase agreement with Rite Aid is valued at about $5.2 billion compared with about $15 billion under the previous merger agreement.

While the number of stores Walgreens Boots is acquiring is lower, the agency said it believes it will bolster the company's market position in underpenetrated geographic areas and provide opportunities for further cost synergies through inventory procurement scale advantages.

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