Fitch Affirms Johnson & Johnson's Credit Ratings.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed the following ratings for Johnson & Johnson: --Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) 'AAA'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'AAA'; --Subordinated debt 'AAA'; --Short-term debt commercial paper 'F1+'. The ratings apply to approximately $2.8 billion of debt. The Rating Outlook is Stable. Fitch's affirmation follows Johnson & Johnson's (JNJ JNJ Johnson and Johnson (stock symbol) JNJ Journal of Nursing Jocularity ) announcement that it will acquire Pfizer's (PFE 1. (text, editor) PFE - Programmer's File Editor. 2. (language) PFE - Portable Forth Environment. ) consumer health care business for approximately $16.6 billion in cash. The transaction will be financed with cash on hand and short-term borrowings. Fitch expects that free cash flow will pay down the additional borrowings within two years. While this is a relatively large transaction, Fitch believes the acquisition is strategically sound. JNJ has a long successful history in the consumer health care market. The company has built is business through acquisitions, expanding markets for existing products, investing in improvements on existing products, developing a significant distribution system, and investing heavily in product promotion. The acquisition broadens JNJ's presence in the consumer health care market and strengthens its existing market share in a number of segments. Though the two companies have products that serve the same market segments, Fitch believes there is enough differentiation between the products that should limit significant divestitures. Nevertheless, Fitch will monitor the regulatory approval process. JNJ expects to gradually generate $500 million to $600 million in cost synergies, fully realized by 2009. On balance, JNJ's past acquisitions have generated above-market growth, and Fitch expects JNJ to perform similarly with the PFE consumer health care acquisition. JNJ generated free cash flow of roughly $6.1 billion for the latest 12 months (LTM LTM abbr. long-term memory ), ending April 2, 2006. Fitch expects JNJ will continue to generate significant positive free cash flow going forward. JNJ has manageable capital expenditure requirements for a company's size. At April 2, 2006, JNJ had approximately $17.2 billion in cash and $3.6 billion availability in various forms of unused credit with approximately $800 million in debt maturing during the next five years. At April 2, 2006, LTM interest coverage (EBITDA/interest) was 91.8 times (x) and leverage (total debt/EBITDA) was 0.18x, or adjusted debt/FFO was 0.34x. Johnson & Johnson develops, makes, and markets a broad range of health care products. Its businesses include pharmaceuticals, biotherapeutics, medical devices, medical diagnostics, and consumer health care. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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