S&P Global Ratings downgraded its rating on Becton Dickinson and Co., including the corporate credit rating and the senior unsecured issue-level ratings to BBB from BBB+.
The outlook on the ratings is stable.
S&P said the downgrade reflects its view that the company's increasing business risk from the acquisition of C. R. Bard Inc. is more than offset by the considerable increase in its debt leverage. The deal follows the company's $12.5 billion acquisition of CareFusion in March 2015, which also resulted in a period of elevated debt leverage.
The rating agency expects the company to firmly prioritize deleveraging over share repurchases and mergers and acquisitions for the next two years or until it achieves those deleveraging goals.
S&P believes the deal strengthens the company's market position in medication management and infection prevention, materially increases scale, improves product diversity and bolsters the company's competitive advantage.
The rating agency expects the acquisition to improve Becton's EBITDA margins and pace of revenue growth along with growth opportunities for Bard's products outside the U.S.
S&P said the stable outlook reflects prospects for modest revenue and EBITDA growth, and the agency's confidence in Becton Dickinson's commitment to prioritize deleveraging over the next two years. The agency expects that the company will generally operate its business with net debt below 3.75x.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.