SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCNet:  Fitch Places CFR's IDRs on Rating Watch Positive on Proposed Acquisition by Abbott

[May 19, 2014]

Fitch Places CFR's IDRs on Rating Watch Positive on Proposed Acquisition by Abbott

CHICAGO --(Business Wire)--

Fitch Ratings has placed all of the credit ratings of CFR Pharmaceuticals S.A. and its subsidiary CFR International SpA on Rating Watch Positive. A complete list of rating actions follows at the end of this press release.

Today's action follows the announcement that Abbott Investments Luxembourg S.A.R.L., a subsidiary of Abbott Laboratories (Abbott; 'A+') has entered into a definitive agreement to acquire 72.62% of CFR's issued and outstanding shares from its controlling shareholder and will conduct a public cash tender offer for all of the outstanding shares of CFR. Assuming all publicly-held shares are tendered, the total purchase price would be approximately $2.9 billion, plus the assumption of net debt of approximately $430 million. The acquisition is subject to regulatory and shareholder approvals.

Fitch expects the transaction to be approved by regulatory officials and to close during the second half of 2014 at which time the Rating Watch Positive will be resolved. Assuming the transaction is consummated on the agreed upon terms, the outcome is expected to result in at least a one-notch upgrade of CFR's long-term Issuer Default Rating (IDR) and senior unsecured debt. The upgrade could be significantly more than one notch if CFR's debt is guaranteed by Abbott and if it integrates CFR both financially and operationally.

Fitch believes Abbott's acquisition of CFR makes sense strategically, as it would increase Abbott's already strong position in the fast growing Latin American branded-generic pharmaceutical market. Developing markets such as Latin America are expected to provide the bulk for growth for this product segment. Abbott expects CFR to contribute approximately $900 million to its annual sales by 2015. The acquisition does pose some integration risk, but Abbott has stated that the financial success of this acquisition does not rely on anticipated significant cost synergies.

Fitch has placed the following ratings on Rating Watch Positive:

CFR Pharmaceuticals S.A.

--Long-term IDR 'BBB-';

--Local currency long-term IDR 'BBB-';

--National long-term rating 'A (cl)';

--National scale issue ratings and debt programs 'A (cl)'.

CFR Internationl SpA


--Notes due in 2022 'BBB-'.

RATING SENSITIVITIES

--A positive rating action would likely coincide with the successful completion of the acquisition at which time the linkage between CFR and its new parent will be analyzed under Fitch's parent-subsidiary methodology. If the linkage is viewed as strong, CFR ratings could be upgraded significantly. A final decision will depend on the assessment of legal, operational and strategic ties between the two companies

--A negative rating action would result from the acquisition falling through. In this case, the Rating Watch Positive would be removed and the ratings affirmed at their current levels.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2013);

--'National Scale Ratings Criteria' (Oct. 30, 2013);

--'Parent and Subsidiary Rating Linkage' (Aug. 5, 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

National Scale Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=830724

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON (News - Alert) THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.


[ Back To Technology News's Homepage ]

OTHER NEWS PROVIDERS







Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy