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Announcement:

Bristol's acquisition of Amylin is credit positive, A2 rating affirmed

02 Jul 2012

Approximately $5 billion of rated debt affected

New York, July 02, 2012 -- Moody's Investors Service affirmed the A2 senior unsecured and Prime-1 short-term rating of Bristol-Myers Squibb Company ("Bristol"). This action follows the announcement that Bristol will acquire Amylin Pharmaceuticals, Inc. ("Amylin") for approximately $7 billion including assumed debt, and that Bristol will enter collaboration agreements with AstraZeneca related to Amylin. After the acquisition closes, AstraZeneca will pay Bristol $3.4 billion and the two parties will equally share Amylin profits and losses.

The rating outlook on Bristol remains stable.

Ratings affirmed:

Bristol-Myers Squibb:

Senior Unsecured ratings of A2

Senior Unsecured Bank Credit Facility rating of A2

Senior Unsecured Shelf rating of (P)A2

Subordinate Shelf rating of (P)A3

Preferred Shelf rating of (P)Baa1

Commercial Paper rating of P-1

"Bristol's acquisition of Amylin is credit-positive because of conservative financing and the presence of approved, marketed products, complementing Bristol's portfolio of Type 2 diabetes treatments," stated Michael Levesque, Moody's Senior Vice President.

Moody's expects that Bristol's net funding need of approximately $3.5 billion will be met with existing cash and a modest amount of new debt, allowing Bristol to continue preserving good credit ratios in Moody's "A" ranges.

RATINGS RATIONALE

Bristol's A2 rating reflects the company's good market presence in the global pharmaceutical market, where it ranks smaller than most "Big Pharma" firms, but still considerably larger than biotech and specialty pharmaceutical companies. Bristol's pipeline momentum has been strong, and Moody's expects newly launched products like Yervoy (melanoma) will continue to have strong sales growth. Moody's believes that, despite a recent delay in receiving FDA approval for Eliquis (atrial fibrillation), that Eliquis will soon be approved and generate meaningful sales. The A2 rating also reflects the company's exposure to rapidly declining Avapro and Plavix sales following their recent patent expirations, which will pressure results for the remainder of 2012. Growth in newer products and successful pipeline execution will be critical in reducing the negative impact. Credit metrics should remain in Moody's "A" ranges over the near term. Over time, Bristol's US cash needs including shareholder dividends or other acquisitions may require an increase in debt levels, potentially pressuring credit metrics.

The rating outlook is stable. Bristol's credit ratios will deteriorate throughout the balance of 2012 because of patent expirations, but should remain within Moody's "A" ranges. Over time, Moody's could upgrade the ratings if Bristol continues good pipeline execution, improves its business diversity, and sustains key credit ratios in the "Aa" ranges or stronger including debt/EBITDA below 1.25 times, CFO/debt above 55%, and FCF/debt above 30%. Conversely, Moody's could downgrade Bristol's ratings if pipeline execution falters, if new product launches are disappointing, or if credit metrics are not sustained within Moody's "A" ranges. Specifically, a downgrade could occur if debt/EBITDA is sustained above 1.75 times, or if CFO/debt or FCF/debt is sustained below 40% and 22.5%, respectively.

The principal methodology in rating Bristol was the Global Pharmaceutical Industry Methodology published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Headquartered in New York, New York, Bristol-Myers Squibb Company [NYSE: BMY] is a global pharmaceutical and related health care products company. The company reported approximately $21.2 billion of net sales in 2011.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Michael Levesque, CFA
Senior Vice President
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Peter H. Abdill, CFA
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Bristol's acquisition of Amylin is credit positive, A2 rating affirmed
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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