Moody's may lower Thermo Electron, raise Fisher

Moody's Investors Service said it placed the credit ratings of Thermo Electron Corp. under review for possible downgrade, including the senior unsecured debt rating at Baa1, following the recent announcement that it agreed to acquire Fisher Scientific International, Inc. in an all-stock transaction for $10.6 billion, plus the assumption of $2.2 billion in debt of Fisher.

Concurrently, Moody's said it placed the credit ratings of Fisher under review for possible upgrade, including the corporate family rating at Ba1. The agreement is expected to be finalized in the fourth quarter and is yet to be approved by its shareholders and industry regulators.

Moody's said the review will focus on several factors, including the benefits of offering a fully integrated solution and product portfolio to research laboratories; the diversity and stability of the combined company's revenue base; potential synergies from reducing costs and selling a full product portfolio; potential uses of the company's free cash flow to restructure the balance sheet and pursue small product acquisitions; and the risks of integrating the two companies, including some loss of existing employees and customers.

Thermo Electron ratings placed under review for possible downgrade include its senior unsecured rating at Baa1, its senior unsecured shelf rating at prospective Baa1 and subordinated shelf rating at prospective Baa2.

Fisher Scientific ratings placed under review for possible upgrade include its corporate family rating of Ba1, its senior secured guaranteed revolver due 2009 at Ba1, its senior secured guaranteed dollar term-loan A due 2009 at Ba1, its 2.50% senior unsecured convertible notes due 2023 at Ba1, its floating rate senior convertible contingent notes due 2033 at Ba1, its 3.25% senior subordinated convertible notes due 2024 at Ba2, its 6.75% senior subordinated notes due 2014 at Ba2 and its senior subordinated notes due 2015 at Ba2.

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