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Thursday, March 31, 2011

Moody's (MCO) Places Valeant (VRX) Under Review

After announcing its considering acquiring Cephalon Inc. (NASDAQ:CEPH), Valeant (NYSE:VRX) has been placed under review by Moody's Investors Service (NYSE:MCO), as they're considering possibly downgrading the company.

Specifically being looked at are Valeant's 'Ba3', or speculative, corporate family rating, probability of default rating and senior unsecured rating.

Moody's Senior Vice President Michael Levesque said, "An acquisition of Cephalon would provide Valeant with new specialty pharmaceutical products including several strong brands in neuroscience and pain, and a stronger generics presence in Central Europe. However, the acquisition offer comes shortly on the heels of the Biovail/Valeant merger and highlights an extremely dynamic acquisition strategy and aggressive financial policies."

If the deal is consummated, Moody's said it will zero in on the terms of the deal, debt, credit metrics effects, financial policies and integration challenges.

Moody's did note if there is a downgrade it will probably be one notch.

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