Following Merck’s request for a withdrawal of Scope’s public ratings on the German conglomerate, the rating agency has converted all ratings into unsolicited subscription ratings.

No action has been taken on the A/Stable issuer rating of Merck KGaA following a monitoring review.

Following the recent upgrade of the Merck KGaA issuer rating and its financing subsidiaries, Scope has updated its analytical report on Merck KGaA.

The upgrade is driven by the improved leverage due to the group’s strong growth and resilience to macroeconomic headwinds.

No action has been taken on the ratings until Scope received additional guidance on the company's medium-term cash deployment and deleveraging policy. This will likely be provided within the upcoming capital markets day.

The Positive Outlook is driven by the expectation that the greatly improved credit metrics will be sustained.

The ratings reflect the company's strong deleveraging focus after the Versum acquisition, its limited exposure to the coronavirus crisis and the expectation that it will deliver on its pharma pipeline.

The rating reflects Merck's strong divisional portfolio, including credit-supportive underlying industries, and the expectation that credit metrics will improve after the acquisition of Versum.

Expected deterioration in credit metrics likely to be mitigated by divestiture proceeds and rapid pay-back of debt within 24 months following the takeover; neutral to slightly positive effects anticipated for the business risk profile.

Due to an internal error, Scope had affirmed the Merck KGaA short term rating of S-2 on November 2, 2018. The correct short term rating is S-1. Today’s rating action corrects this error.