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Saputo president and CEO Lino Saputo Jr., right, and his father Lino, chairman of the board, get set for the the company's annual meeting in Laval, Que., on Tuesday, July 31, 2012.
Saputo president and CEO Lino Saputo Jr., right, and his father Lino, chairman of the board, get set for the the company's annual meeting in Laval, Que., on Tuesday, July 31, 2012.
(Paul Chiasson/THE CANADIAN PRESS)

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Saputo’s Morningstar deal: the debt is cheap and easy

When striking a takeover, acquirers grapple with a tough question: how do we pay for it?

Do we issue shares? Raise debt? Dip into our cash account?

For Saputo Inc.’s $1.45-billion takeover of Morningstar Foods LLC, the answer was obvious: debt. Prior to the deal, Saputo net debt was just 0.4 times earnings before interest, taxes, depreciation and amortization. (The company’s long-term debt was $379-million last quarter.)