Bristol-Myers Squibb's ratings are:

--Issuer Default Rating (IDR) of 'A+';

--Senior unsecured debt rating of 'A+';

--Bank loan rating of 'A+';

--Short-term IDR of 'F1';

--Commercial paper rating of 'F1'.

The ratings apply to $6.36 billion of outstanding debt. The Rating Outlook is Stable.

Today, Bristol-Myers Squibb announced its proposed acquisition of Medarex for approximately $2.4 billion, representing a premium of greater than 90% over yesterday's closing price. The companies already collaborate on the development of ipilimumab (MDX-010) which is in Phase III clinical studies investigating the drug candidate for the treatment of metastatic melanoma. Fitch anticipates that no incremental debt will be issued to complete the transaction, expected in the third quarter.

The acquisition is aligned with Bristol-Myers Squibb's continuing effort to focus its operating model toward biologics primarily focused on the physician specialist. The transformation of the business strategy has included the divestment of non-core businesses, including the sale of its Medical Imaging and ConvaTec businesses in 2008 which yielded proceeds of $4.63 billion. This year, the company publicly sold a 17% equity interest in the Mead Johnson nutritionals business in February, generating incremental cash of $782 million. By the end of the second quarter of 2009, cash and short-term investments totaled $8.12 billion.

Bristol-Myers Squibb has minimal exposure to intellectual property losses in the U.S. until late 2011 when the company's pharmaceutical portfolio faces patent losses. Fitch estimates the negative effect of the company's patent cliff will primarily occur in 2012-2013 concomitant with the market exclusivity losses of Plavix in November 2011 and Avapro in March 2012 (including a six-month market exclusivity extension for conducting pediatric studies). The overall revenue impact was lessened in April with the extension of the co-promotion contract with Otsuka for Abilify until April 2015 from November 2012. Operational performance until this time will be determined by revenue gains of Bristol-Myers Squibb's five top-selling products: Plavix, Avapro, Abilify, Reyataz and Sustiva.

Leverage had fallen to 1.3 times (x) for the latest 12-month (LTM) period at the end of the first quarter of 2009 from 2.0x at the end of 2006 following the unexpected limited market introduction of a generic version of Plavix. Fitch expects leverage to decrease annually from operational improvement until significant drug patent losses starting in late 2011. The long-term debt schedule does not include significant maturities around the time of the Plavix patent expiration. Free cash flow was modest for the LTM period ending March 31, 2009 at $24 million. However, Fitch believes that free cash flow will improve annually given the company's solid intellectual property position over the next two years.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

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