Moody's may lower Boston Scientific

Moody's Investors Service said it placed the ratings of Boston Scientific Corp. under review for possible downgrade following the announcement that the company has made an unsolicited bid for Guidant Corp. for $72 per share, or about $25 billion.

Ratings under review include the A3 senior unsecured debt rating, the Baa1 subordinated shelf rating, the Baa2 preferred stock shelf rating and Prime-2 short term rating.

The bid represents a 14% premium over the purchase price agreed upon by Guidant and Johnson & Johnson last month, the agency said.

The review action is based on the belief that, even if the transaction is not completed, the announcement signals management's willingness to leverage its balance sheet in a manner inconsistent with the recently assigned A3 rating, the agency said.

If completed, this acquisition will likely lower credit ratios, despite the addition of cash flow diversity and growth prospects associated with Guidant's cardiac rhythm management business, the agency said.

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