S&P: Fresenius on watch

Standard & Poor's said it is maintaining its BB+ long-term corporate credit ratings on Fresenius Medical Care AG (FME) and its parent Fresenius AG on CreditWatch with negative implications, where they were placed May 4, following FME's announcement that it had agreed to acquire Renal Care Group Inc. (RCG, BB-/positive).

The agency said it plans to lower the corporate credit ratings on both entities to BB on completion of the $4 billion debt-financed acquisition.

The outlook will be negative.

The outlook will reflect both entities' below-par pro forma debt protection measures for the BB ratings, S&P said.

From a business risk perspective, the agency said it considers the acquisition as mildly positive in the long run, reflecting the enlarged group's solidified market position, its ability to further improve payment terms with private payers and improved operating margin.

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