Moody’s rates Perrigo notes Baa3

Moody's Investors Service said it assigned a Baa3 rating to the $1.6 billion senior unsecured notes offering of Perrigo Finance plc.

The outlook is stable.

Perrigo Finance is a 100% owned finance subsidiary of Perrigo Co. plc, which will fully and unconditionally guarantee the notes.

Proceeds, along with new term loans and equity (issued both to the target shareholders and in the secondary market), will be used to finance the acquisition of Omega Pharmaceuticals for €3.6 billion (about $4.5 billion). Proceeds will also be used to refinance existing debt of both Perrigo and Omega.

Moody’s said Perrigo's Baa3 senior unsecured rating is supported by its leading positions in markets that have relatively stable demand characteristics, such as over-the-counter medicines and niche, high-barrier to entry generic drugs. The ratings are also supported by the company's scale – which will be enhanced with the acquisition of Omega – as well as its good product and manufacturing diversity.

The Baa3 also reflects Perrigo's strong profit margins, modest returns to shareholders and tax-efficient corporate structure, all of which allow the company to generate significant free cash flow available to repay debt or make business investments, the agency said.

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