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

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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.)

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