S&P puts Stryker on watch

S&P said it placed Stryker Corp.’s A- ratings on CreditWatch with negative implications.

The placement follows Stryker reporting it plans to buy Vocera Communications Inc. for $2.9 billion, S&P said.

“The CreditWatch placement reflects our view that the size and timing of Stryker's proposed $3 billion debt-financed acquisition of Vocera Communications Inc., only a year after the company's $5.4 billion acquisition of Wright Medical Group N.V. pushed its leverage above 3x, indicates a shift toward a more aggressive financial policy. In addition, Stryker's operating performance continues to be pressured by the ongoing Covid-19 pandemic, resulting in weaker-than-expected EBITDA margin and leverage at the end of the third quarter of 2021,” the agency said in a press release.

S&P said it projects Stryker's leverage rising to 3.3x in 2022 and 2.7x in 2023, compared with its previously projected leverage improvement to 2.5x in 2022.

The agency said it plans to resolve the CreditWatch once the deal closes, expected in the first quarter of 2022.

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