Moody’s might cut Reckitt Benckiser

Moody's Investors Service said it placed the A1 issuer rating of Reckitt Benckiser Group plc (RB) and the A1 senior long term debt ratings and P-1 commercial paper rating of Reckitt Benckiser Treasury Services plc on review for downgrade.

From a preliminary analysis, based on the current proposal, any downgrade is likely not to exceed two notches, the agency noted.

This action follows the announcement that Reckitt Benckiser is in advanced negotiations to offer $90 for each Mead Johnson in cash, valuing Mead Johnson's entire share capital at about $16.7 billion, plus net debt acquired of $1.2 billion.

"Our decision to place RB's ratings for downgrade recognizes that, while the acquisition will enhance RB's business profile, it will lead to a significant deterioration in RB's credit metrics," Ernesto Bisagno, Moody's vice president, senior analyst and lead analyst for Reckitt Benckiser, said in a news release.

"In addition, the execution risk will increase as RB will need to address Mead Johnson's low organic growth particularly in the U.S. and China."

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