S&P maintains negative credit outlook for Barr

Ratings for Montvale, N.J.-based Barr were originally were placed on a negative outlook on May 9 following disappointing earnings and sharply lowered expectations, S&P said. It reaffirmed the outlook Friday following Israel-based Teva's plan to by Barr for about $7 billion.

"Upon the completion of the acquisition of Barr by higher rated Teva, expected to close before the end of 2008, the corporate credit rating on Barr will be withdrawn," S&P credit analyst Arthur Wong said in a statement. "However, should the transaction not be completed, we will review Barr's prospects, with the potential for a ratings downgrade."

Shares of Barr rose $6.29, or 11 percent, to $63.46 in afternoon trading.

In the buyout deal, Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American Depositary Receipt for each share they own, or a total purchase price of $66.50 per share. That represents a 16 percent premium to Barr's $57.17 closing price Thursday. Teva also is offering to assume $1.5 billion of Barr's debt.

Meanwhile, shares of Teva rose $2.38, or 5.9 percent, to $43.45 in afternoon trading. That stock has traded between $40.16 and $50 over the past 52 weeks.