Here are five key notes:
1. While placing Stryker’s A3 rating under review, Moody’s simultaneously affirmed the company’s short-term Prime-2 rating.
2. Sage’s low tech product line, which is aimed at reducing hospital acquired conditions, will help offset volatility in Stryker’s medical surgical segment.
3. Also, Sage will reduce Stryker’s dependence on its orthopedics segment as it adds diversification.
4. However, the deal will likely result in a significant increase in debt. “Stryker’s acquisition of Sage will likely require significant incremental debt because the company has other near-term US cash needs,” said Diana Lee, a Moody’s senior credit officer.
5. Stryker’s current A3 ratings reflected its leading presence in orthopedics and certain medical product areas, strong credit metrics and a relatively conservative capital structure.
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