Moody's affirms Johnson & Johnson

Moody's Investors Service said it affirmed the Aaa/Prime-1 ratings of Johnson & Johnson (J&J), following the announcement that J&J and Guidant have entered a revised merger agreement in which J&J intends to acquire Guidant in a stock-and-cash financed transaction valued at $23.2 billion.

The affirmation of J&J's ratings reflects Moody's belief that the transaction parameters remain consistent with J&J's Aaa rating based upon Guidant's good position in the implantable cardioverter defibrillator market, its bare metal stent technology and delivery systems and the longer term opportunities from bio-absorbable stents as well as the use of equity to fund about 50% of the net cost of the transaction.

Moody's said it believes that the primary risks to the transaction include integration risk, the large reduction in J&J's net cash position and intellectual property litigation in the stent business.

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