S&P Places AbbVie (ABBV) on CreditWatch Negative Following Revised Shire (SHPG) Offer

Standard & Poor's Ratings Services said today it placed its 'A' corporate credit rating and senior unsecured debt rating on AbbVie (NYSE: ABBV) on CreditWatch with negative implications. This action reflects AbbVie's announcement that it will acquire UK-based Shire plc (Nasdaq: SHPG) for $54.7 billion, partly funded with incremental debt. Pro forma leverage increases to 3.1x.

We affirmed our 'A-1' commercial paper rating and did not place it on CreditWatch. We do not expect to lower this rating based on our belief that AbbVie will continue to have "exceptional" liquidity after the acquisition of Shire.

"AbbVie has a well-established position in the branded pharmaceuticals market, a highly profitable, market-leading product, and a promising medium-term pipeline," said credit analyst Michael Berrian. "The acquisition of Shire provides some diversity to AbbVie's portfolio through the addition of a neuroscience therapeutic segment (including a leading market position in the treatment of attention deficit hyperactivity disorder), five products that treat rare diseases, and an ulcerative colitis treatment. Pro forma for this acquisition, we expect AbbVie's concentration in rheumatoid arthritis (RA) and immunology to remain somewhat high at 45%, although that is a reduction from the current 57% for AbbVie as a standalone entity."

We expect to lower the rating on AbbVie to 'A-' assuming the acquisition of Shire is consummated as proposed in early 2015.

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