Johnson & Johnson Retains 'AAA' Rating Amid $14.6 Billion Acquisition

Published 3 hours agoJNJ

Johnson & Johnson Retains 'AAA' Rating Amid $14.6 Billion Acquisition

Johnson & Johnson has successfully retained its prestigious 'AAA' credit rating from S&P Global Ratings after a period of uncertainty. The rating agency removed the company from CreditWatch Negative following its $14.6 billion acquisition of Intra-Cellular Therapies, indicating confidence in J&J's strategic financial management.

Initially, S&P Global placed J&J on CreditWatch Negative due to concerns about potential increases in leverage that could affect the company's financial stability. The acquisition was expected to raise J&J's adjusted leverage to approximately 1.4 times, surpassing the 1.0 times threshold that typically triggers a rating downgrade. However, projections suggested leverage could decline to 1.1 times by the end of 2025, improving below 1.0 times by late 2026.

Despite the initial leverage concerns, Johnson & Johnson's management remains committed to conservative financial practices. The company has a history of successful integration and debt reduction following major acquisitions, underscoring its capability to handle significant financial undertakings while maintaining its strong credit standing. According to Investing.com, the CreditWatch status was resolved after thorough evaluation of J&J's 2024 performance and future financial strategies.

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