Moody's could lower Walgreen

Moody's Investors Service said it placed Walgreen Co.'s senior unsecured rating on review for downgrade.

At the same time, Moody's affirmed Walgreen's commercial paper rating of Prime-2.

Moody's said the review for downgrade was prompted by Walgreen's announcement that it entered into an agreement to purchase 45% of the equity of Alliance Boots.

Walgreen intends to finance this transaction with a combination of additional debt, equity and excess cash, the agency said.

"Walgreen's equity investment in Alliance Boots will weaken its capital structure. Alliance Boots is a highly leveraged company and Walgreen will also significantly increase its debt level to finance the investment," Moody's senior credit officer Maggie Taylor said in a news release.

"However, the combination should drive substantial cost savings from purchasing synergies for both companies," Taylor added in the release.

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