Moody's Investors Service on Friday placed ratings of Freescale Semiconductor Inc. on review for possible downgrade after news that a private equity consortium is buying out the company for $17.6 billion. Moody's said its review will focus on the operating strategy of the company under new ownership and the proposed financing and capital structure arising from this acquisition. The agency added that the ratings could be subject to a multi-notch downgrade depending on the level of debt incurred in the transaction.
Who cares? Shareholders get $40 cash and Blackstone and others end up with a headache. So what is the ratings review of Freescale supposed to accomplish? Now if you want to review the ratings of the investment banks backing Blackstone…that’s a different story.
Disclosure: This article was written by Saul Sterman, CEO CrossProfit.com. Unless explicitly stated otherwise, there are no conflicts of interest.