Merck 2014 Annual Report Download - page 135

130 GROUP MANAGEMENT REPORT → Report on Risks and Opportunities
S&P
A
A-
BBB+
BBB-
Moody’s
A2
A3
Baa1
Baa2
2009→ 2010→ 2011→ 2012→ 2013→ 2014→
•Moody’s •S&P
REPORT ON RISKS AND OPPORTUNITIES →
OVERVIEW OF RATING DEVELOPMENT:
Source: Own illustration.
Assessments by independent rating agencies
The capital market uses the assessments published by rating agen-
cies to help lenders assess the risks of a financial instrument. The
Group is currently rated by the agencies Standard & Poor’s and
Moody’s. While Standard & Poor’s issued a long-term rating of A
with a negative outlook, Moody’s issued it a Baa1 rating with a
negative outlook. The drop in the Moody’s rating by one grade in
comparison with the previous year as well as the negative outlook
of both rating agencies is due to the expected higher debt level in
the course of the Sigma-Aldrich transaction. In line with market
procedures, the company’s financing conditions are closely tied to
its rating. The better a rating, the more favorably the Group can
generally raise funds on the capital market or from banks.
LEGAL RISK S
Merck KGaA, Darmstadt, Germany, generally strives to minimize
and control its legal risks. The Group has taken the necessary pre-
cautions to identify threats and defend its rights where necessary.
Nevertheless, the Group is still exposed to litigation risks or
legal proceedings. These include in particular risks in the areas of
product liability, competition and antitrust law, pharmaceutical
law, patent law, tax law, and environmental protection. As a re-
search-based company, the company has a valuable portfolio of
industrial property rights, patents and brands that could become
the target of attacks and infringements. The outcome of future
proceedings or those currently pending is difficult to foresee.
Generally, it is not possible to rule out that the Group will face
third-party claims arising from the same issue despite the conclu-
sion of
legal proceedings. Court or official rulings or settlements
can lead to expenses with a significant impact on our business and
earnings.
Tax risks are reviewed regularly and systematically by Group
Tax. Corresponding standards and guidelines are used in order to
identify tax risks at an early stage as well as to review, evaluate
and correspondingly minimize them. Measures to reduce risks are
coordinated by Group Tax together with the subsidiaries abroad.
Merck KGaA, Darmstadt, Germany, views the legal matters
described below as the most significant legal risks. This should not
be seen as an exhaustive list of all legal disputes currently ongoing.