There has been a rumor that Company Z may become a takeover target for another company in the industry, or even for a private equity fund in a leveraged buy-out (LBO). Here is the updated data on Company Z:

Current Capitalization (Millions of EUR)
Currency	Million EUR
Shares Price	$ 250.0
Shares Outstanding	221.0
Market Capitalization	55,250.0
- Cash & Short Term Investments	5,125.0
+ Total Debt	55,625.0
+ Pref. Equity	-
+ Total Minority Interest	-
=Total Enterprise Value (TEV)	105,750.0
Book Value of Common Equity	13,213.0
+ Pref. Equity	-
+ Total Minority Interest	-
+ Total Debt	55,625.0
Total book capital	68,838.0

a) Given the data above, what is your guess for the value of the offer that an acquirer would have to make in order to buy Company Z?
Offer =		Million Euros

b) Discuss the following statement: "This company is not a great candidate for an LBO, because its leverage ratio is already relatively high."

c) Discuss the following statement: "The potential acquirer will increase the amount of debt in its books by more than 100,000."

Answer rating: 100% (QA)

a Offer 10575000 Million Euros b The ratio of debt to equity in leveraged buyout LBO is usually ... View the full answer