Moody's says may review M&As if new tax rules lead to altered terms

Tue Sep 23, 2014 6:34pm EDT
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Sept 23 (Reuters) - Moody's Investors Service said it may review the credit implications for pending tax-inversion deals in the healthcare and pharmaceutical sector if U.S. Treasury's new rules force companies to alter deal terms.

The U.S. Treasury unveiled harsher-than-expected changes to the existing rule book for inversions late on Monday after companies increasingly started to redomicile abroad to avoid higher taxes at home.

"While there is no immediate ratings impact on these companies, we will assess the credit implications of any changes they might make to their deals' terms, some of which may be credit negative," Moody's said on Tuesday.

Moody's also said the assessment of the credit implications could result in credit-negative ratings for some of the mergers.

Affected companies include Medtronic Inc, Mylan Inc , Salix Pharmaceuticals, Auxilium Pharmaceuticals and AbbVie Inc.

In a separate release, Fitch Ratings said the new tax inversions rules were unlikely to deter the deal between Burger King Worldwide and Canada's Tim Hortons Inc.

Fitch said the structure of the leveraged buyout would help the companies avoid some of the challenges from the new rules. (Reporting by Abinaya Vijayaraghavan in Bangalore; Editing by Sriraj Kalluvila)