Research Update: Bristol-Myers Squibb Co. Ratings Placed On CreditWatch Negative On Plan To Acquire Celgene Corp.

Pharmaceutical manufacturer Bristol-Myers Squibb Co. plans to buy Celgene Corp. for about $94 billion, including the assumption of about $20 billion in debt from Celgene, funded partially with debt and cash on hand. We expect pro forma projected leverage for 2019 will rise materially to the mid-3x area from nearly no net leverage as of Sept. 30, 2018, though we expect leverage to reduce to around 2.2x within two years of the transaction close. We are placing all our ratings on Bristol-Myers, including the 'A+' issuer credit rating, 'A-1+' short-term rating, and 'A+' issue-level ratings on Bristol-Myers on CreditWatch with negative implications. Despite more debt, we believe the business has strengthened as a result of the transaction and expect the

... Co. plans to buy Celgene Corp. for about $94 billion, including the assumption of about $20 billion in debt from Celgene, funded partially with debt and cash on hand. + We expect pro forma projected leverage for 2019 will rise materially to the mid-3x area from nearly no net leverage as of Sept. 30, 2018, though we expect leverage to reduce to around 2.2x within two years of the transaction close. + We are placing all our ratings on Bristol-Myers, including the 'A+' issuer credit rating, 'A-1+' short-term rating, and 'A+' issue-level ratings on Bristol-Myers on CreditWatch with negative implications. + Despite more debt, we believe the business has strengthened as a result of the transaction and expect the combined entity to generate substantial cash flow, enabling the company to deleverage around 2.2x in 2021, two years after we expect the transaction will close. + We expect to resolve our CreditWatch listing when the transaction closes....

Research Update