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.)