Moody's Places Hill-Rom Holdings' (HRC) Senior Unsecured Rating on Review for Downgrade Following Welch Allyn Announcement
Get Alerts HRC Hot Sheet
Join SI Premium – FREE
Moody's Investors Service placed Hill-Rom Holdings (NYSE: HRC) Baa3 senior unsecured rating under review for downgrade following the company's announcement that it has entered into an agreement to acquire Welch Allyn, a US-based medical device manufacturer, for approximately $2.05 billion. The acquisition is expected to close by the end of September 2015.
Rating placed under review:
Senior unsecured rating -- Baa3
RATING RATIONALE:
"The acquisition of Welch Allyn will more than triple Hill-Rom's debt, and significantly increase its financial leverage" stated John Zhao, Vice President and Senior Analyst at Moody's. "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" added Zhao.
During the rating review, Moody's will assess the expected increase in Hill-Rom's leverage to fund the proposed transaction. Additionally, Moody's will focus on expectations around Hill-Rom's financial policy with regard to additional acquisitions and the company's ability to reduce leverage following the proposed acquisition. Moody's will also consider the strategic benefits of the acquisition and the potential synergies that may be realized, in addition to reviewing both companies' underlying operating trends.
The principal methodology used in rating Hill-Rom was the Global Medical Product and Device Industry published in October 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Sony/Apollo bid for Paramount could be worth as much as $29 billion - Source
- Form 8.3 - Lok’n Store Group PLC
- B.Riley Resumes EverQuote (EVER) at Buy
Create E-mail Alert Related Categories
Credit RatingsRelated Entities
Moody's Investors Service, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!