Moody's drops Merck

Moody's Investors Service said it downgraded the A3 issuer and senior unsecured ratings of Merck KGaA and its subsidiaries to Baa2, following the successful closing of the acquisition of Millipore Corp.

The outlook is stable.

The downgrade is in line with the guidance provided by Moody's on March 29.

At that time, Moody's said it confirmed the P-2 short-term rating of Merck.

Moody's said it I also withdrew the Ba1 corporate family and probability of default ratings of Millipore as well as ratings relating to certain debt instruments of Millipore.

"While the €5.2 billion increase in net debt will initially weaken Merck's credit metrics to levels below those expected for a Baa2 rating, Moody's has taken comfort from the perceived commitment of Merck's management to retain a solid investment grade rating and to adhere to its deleveraging strategy, which should allow the company to reach credit metrics in line with the Baa2 rating category within 18 to 24 months after the closing of the transaction, " said Sabine Renner, Moody's lead analyst for Merck.

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