Fitch rates Express Scripts debt BBB

Fitch Ratings said it assigned a BBB rating to Express Scripts' proposed debt offering. The issuer default rating is BBB.

The outlook is stable.

Proceeds will be used, in part, to fund the company's acquisition of NextRx, owned by WellPoint Inc., for $4.675 billion. Fitch said it assumes that the company will require no more than $2.5 billion in acquisition-related debt, with the remainder funded by cash on hand and stock.

The agency said it views the risk associated with a 12- to 18-month integration period as manageable. ESRX's newfound scale, efficient operations, strong service levels and tax savings should result in strong cash flow generation, Fitch added.

Reported total debt-to-EBITDA ratio may rise to 2.3x shortly after the deal closes, which is above the 2x level expected for the rating but does not include synergies from the transaction, the agency said. And the company is expected to reduce leverage to below 1.5x by Dec. 31, 2010.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.