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Unformatted text preview: low though being a highly leveraged company. As said above, Commerce Bancshares Inc. is a highly levered firm with a debt equity ratio of 8.14: 1 which is very high. The assets are mostly financed through debt and which pose a threat for the company in times of financial crisis. The book value per share is $ 23.73 which is a very low as per banking industry standards. As given in the case, the buying company is a weighing a leveraged buyout option, therefore the plan to take over Commerce Bancshares Inc. should not be proceeded with as Commerce Bancshares Inc. itself is a highly levered firm and by making a leveraged buyout of the same, the overall position of the new consolidated firm will be very risky....
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- Spring '08