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S&P affirms Sanofi's corporate credit ratings

S&P Global Ratings affirmed Sanofi's AA long-term and A-1+ short-term corporate credit ratings with a stable outlook.

The rating agency said the stable outlook reflects its expectations that the French drugmaker, despite the costs of its planned takeovers of Bioverativ Inc. and Ablynx NV, will continue to grow by low single digits, while maintaining profitability at about 30% and generating robust future free cash flow that will help reduce debt.

In January, Sanofi announced its plans to acquire hemophilia drugmaker Bioverativ for about $11.6 billion and Belgian biopharmaceutical company Ablynx for €3.9 billion. Sanofi is planning to finance both transactions with available cash and newly issued debt.

S&P said it believes the Bioverativ acquisition supports its assessment of Sanofi's business risk profile as excellent. The rating agency estimates full-year contribution from Bioverativ in 2019 of about €900 million to €1 billion in revenues with EBITDA margins of more than 30%. The agency does not factor any earnings from Ablynx, since it is only likely to launch its first product in late 2018 or in 2019.

S&P also revised down its assessment of Sanofi's financial risk profile to modest from minimal, and changed its modifier on financial policy to neutral from negative.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.