U.S. pharmaceutical company AbbVie Inc. is acquiring Pharmacyclics Inc. for $21 billion in a primarily debt- and equity-financed transaction. Leverage will be considerably higher than we expected, above 2x through 2016, compared with our initial expectations that leverage would be less than 1.5x; however, we forecast a gradual delevering over the next two years. We are affirming our 'A' corporate credit rating and revising the outlook to negative. The negative outlook reflects a risk to our base case, which indicates that our deleveraging scenario could be jeopardized by more debt-financed acquisitions as the company manages through the upcoming patent expiration on Humira. (Watch the related CreditMatters TV segment titled, "Abbvie To Acquire Pharmacyclics For $21 Billion," dated March 6, 2015.)
