Joshua Rucker
FINC450
Case Study 34
a. According to Figure 1, there are 113,640,000 shares of National Brands outstanding. But A-1
already owns 5% of them, or 5,682,000, so it will only have to buy the remaining 107,958,000.
At $55 each, the total price will be $5,937,690,000 (a little over $5.9 billion).
b.
The amount of liquid assets (i.e., cash and equivalents) on hand at National is $1,153,000,000. If
A-1 can use this amount to offset the amount of borrowing required, the total amount it will have
to borrow is
$5,937,690,000 – $1,153,000,000 = $4,784,690,000
c. After the purchase, A-1’s total debt will consist of:
A-1’s old debt: $1,899,500,000
National’s debt: $2,110,300,000
