Mylan (MYL) Ratings Placed on CreditWatch Negative by S&P Following Bid to Acquire Perrigo (PRGO)

Standard & Poor's Ratings Services today placed its ratings on Mylan Inc. (Nasdaq: MYL), including its 'BBB-' corporate credit rating, on CreditWatch with negative implications, following its announcement that it was in discussions to acquire Perrigo (NYSE: PRGO) in a roughly $29 billion deal to be funded by a mix of cash, equity, and debt.

A potential acquisition of Perrigo would further strengthen Mylan's business, adding a leading OTC business and a high-margin franchise in Tysabri. Both Perrigo and Mylan are viewed as having "satisfactory" business risk profiles currently.

However, the acquisition could also significantly increase debt leverage. Our current ratings reflect a "significant" financial risk profile, and the potential for improved credit measures. We had expected leverage of 2.2x and funds from operations (FFO) to adjusted debt of about 30% by end of 2015. "To what degree this expectation is disrupted, how quickly the company de-levers, and the company's continued appetite for acquisitions will be significant factors in determining the ultimate rating and outlook," said Standard & Poor's credit analyst Arthur Wong.

We will resolve the CreditWatch placement on Mylan when there is more clarity as to the financing terms of a potential acquisition of Perrigo and the de-levering plans post-acquisition.

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