As at 31 March 2012, the company had $257m in debt. DLX has stated that the cash offer for ALS will be fully debt funded. At $2.00 per share, which has now been rejected, the offer is $188m. If DLX pursue the acquisition they are likely to pay upwards of $200m, taking debt to $450-$500m.
While a quality business with a great brand, I think the fully debt funded acquisition will significantly increase the risk of DLX both operating risk through the integration of the businesses and financial risk as a result of the increased leverage.
I am perhaps, overly conservative when it comes to debt, but I like to protect my hard earned $$$.
DLX Price at posting:
$3.02 Sentiment: None Disclosure: Not Held
