S&P lowers Reckitt Benckiser, rates loan A-

S&P said it lowered Reckitt Benckiser Group plc’s long-term corporate credit rating to A- from A+ and short-term corporate credit rating to A-2 from A-1.

The agency also said it removed the ratings from CreditWatch with negative implications where they were placed in February.

The outlook is stable.

S&P also said it assigned an A- rating to the $20 billion acquisition facilities and £1 billion revolving credit facility.

Reckitt Benckiser is acquiring infant nutrition manufacturer Mead Johnson in an all-cash transaction totaling $17.9 billion, the agency said.

The agency said it believes the acquisition will enable Reckitt Benckiser to diversify in the high-margin branded infant nutrition business and gain leading market positions in the United States and Asia.

The acquisition should allow Reckitt to grow profitably in hygiene and consumer health products with the addition of the infant formula and children nutrition businesses, S&P said.

Mead Johnson will account for about 20% of the combined entity's revenues and EBITDA in 2018, the agency added.

The transaction is subject to approval from shareholders and regulators and is expected to close in the third quarter of 2017, S&P said.

The debt funded nature of the transaction does mean that Reckitt will have substantially higher debt leverage of more than 4x once the transaction is completed, the agency said.

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