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Fitch Affirms Thermo Fisher Ratings, Raises Outlook to Stable

NEW YORK (GenomeWeb) – Fitch Ratings today affirmed Thermo Fisher Scientific's ratings and revised its rating outlook on the firm to stable from a prior negative rating given last month. 

The ratings apply to $14.5 billion of debt as of Sept. 27. In a statement, Fitch said that since Thermo Fisher completed its $13.6 billion acquisition of Life Technologies in the first quarter of 2014, the company has "demonstrated solid and consistently paced improvement in credit metrics."

Through the first three quarters of 2014, Thermo Fisher has applied most of its free cash flow and about $1 billion in proceeds from divestitures to reducing its debt, and Fitch anticipates the company will generate free cash flow of $2.8 billion in 2015, which would allow it to reduce its gross leverage next year, it said.

"It is likely that the company will resume capital deployment for share repurchases and bolt-on acquisitions during 2015," Fitch wrote. "As long as this does not derail progress in deleveraging, it is not likely to result in a downgrade of the ratings."

It noted that the Life Tech integration appears to be "making good progress," and starting in January, Fitch believes that that business could generate above-market organic growth resulting from end-market revenue synergies, including the academic, government, and biopharmaceutical markets.

The ratings affirmed by Fitch include a BBB rating on Thermo Fisher's long-term IDR and senior notes; F2 ratings for its short-term IDR and its commercial paper; and a BBB rating for Life Tech's long-term IDR and senior notes.

Life Tech had about $2 billion of senior notes due in 2015, 2016, 2020, and 2021 before being bought by Thermo Fisher. The notes remain outstanding, Fitch said. 

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