Moody's affirms Mylan's Baa3 rating; outlook changed to negative from developing

Moody's Investors Service has affirmed the Baa3 senior unsecured rating of Netherlands-incorporated Mylan (Nasdaq: MYL) and changed the outlook to negative from developing.

The change in outlook was triggered by the withdrawal of Israel-based Teva Pharmaceutical Industries (NYSE: TEVA)  unsolicited offer to acquire Mylan (The Pharma Letter July 27). This significantly reduced the likelihood that Mylan's ratings will be upgraded over the next 12-18 months, said Moody’s.

The negative outlook reflects the higher leverage and weakening of credit metrics that will occur if Mylan is successful in consummating its unsolicited offer to acquire Perrigo Company (NYSE: PRGO; Baa3 stable). The outlook also reflects the risk that Mylan increases its offer to buy Perrigo, given recent weakness in Mylan's stock price (approximately 69% of Mylan's current offer for Perrigo would be funded with Mylan shares). Moody’s says a meaningful increase in the cash portion of Mylan's bid for Perrigo could result in financial leverage that no longer supports an investment grade rating.