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Moody's affirms Sanofi's credit rating after $11.6B Bioverativ buy

Moody's affirmed Sanofi's A1 long-term credit rating.

The affirmation follows the French drugmaker's recently announced agreement to buy rare disease company Bioverativ Inc. for $11.6 billion.

The outlook on the ratings is stable.

While the deal will increase Sanofi's debt, the company is expected to rapidly deleverage allowing for credit metrics to be comfortably positioned in the rating category by 2019 end, Moody's said.

Bioverativ, which specializes in hemophilia treatment, would fit well with Sanofi's broader strategic priorities of maintaining a leadership positioning in rare diseases, the agency added.

Moody's cautioned that while the growth fundamentals are strong for the hemophilia treatment market, competition is building up as several companies won approval for new therapies.

The agency also expects significantly lower share buybacks in 2018 compared to 2017, with Sanofi expected to apply free cash flows for debt reduction.