...Fitch Ratings revised the Outlook on UK pharmaceuticals group GlaxoSmithKline PLC's (GSK) Long-Term Issuer Default Rating (IDR) to Negative from Stable in April 2018, while affirming the IDR at `A'. Fitch also affirmed the senior unsecured instrument rating at `A' for debt issued by GlaxoSmithKline Capital PLC and GlaxoSmithKline Capital Inc. The Outlook revision followed GSK's announcement that it intends to buy out Novartis AG's 36.5% stake in their consumer health joint venture (JV) for GBP9.2 billion in cash. The deal is expected to close by end-2Q18. The Negative Outlook is driven by our expectation that, if debt-funded, the acquisition would increase leverage above our negative sensitivity of 3.0x. We would expect a debt-funded purchase to raise GSK's funds from operations (FFO) adjusted net leverage to close to 4.0x by end-2018. While the increase in leverage may only be temporary, leverage could remain permanently above 3.0x, depending on M&A activity or investments. Nonetheless,...
