trending Market Intelligence /marketintelligence/en/news-insights/trending/_MHkis0F6EUGoLSMava_zg2 content esgSubNav
In This List

S&P downgrades Takeda, upgrades Shire ratings after deal closing


Baird Research is Now Exclusively Available in S&P Global’s Aftermarket Research Collection


Japan M&A By the Numbers: Q4 2023


Essential IR Insights Newsletter Fall - 2023

Case Study

A Corporation Clearly Pinpoints Activist Investor Activity

S&P downgrades Takeda, upgrades Shire ratings after deal closing

S&P Global Ratings downgraded Takeda Pharmaceutical Co. Ltd.'s long-term issuer credit and senior unsecured debt ratings by a notch to BBB+ from A-, following the closing of its £46 billion Shire plc acquisition.

The rating agency also affirmed Takeda's short-term issuer credit rating at A-2.

Simultaneously, S&P upgraded Dublin-based Shire's long-term issuer credit rating to BBB+ from BBB-, and its short-term issuer credit rating to A-2 from A-3.

Both Takeda and Shire's ratings were removed from CreditWatch with negative and positive implications, respectively.

According to S&P, the Japanese drugmaker's key financial ratios will materially worsen due to the increased debt incurred from the deal. Takeda's consolidated debt to EBITDA ratio is expected to reach almost 5x, compared to 2.3x as of March 31, 2018.

The rating agency does not expect the ratio to swiftly improve, even considering the business benefits brought by the transaction, cost reductions and planned divestitures. S&P sees the ratio will recover to below 4x by the end of fiscal 2020.

Meanwhile, the negative outlooks on Takeda and Shire reflect the agency's belief that uncertainties surround Takeda's ability to quickly conduct major asset sales, which are anticipated to help ease the company's financial burdens. The significant size of these planned asset sales make it difficult to project when they will be completed, S&P added.

S&P said Shire is a core subsidiary of Japan's pharmaceutical giant, with their closely linked strategy, business and financial management.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global Inc. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.