You are analyzing a potential acquisition of American Eagle Outfitters (AEO) by Gap.

Assume AEO has 200 million diluted shares outstanding and are offered $15.00 per share, for a total offer value of $3.0b.

You (the analyst) makes the following assumptions:

• Offer value (equity purchase price):
• 60% in the form of GAP stock
• 40% in cash
• 80% of the cash consideration will be funded by new GAP debt a 5 year note with an interest rate of 5%
• 20% of the cash consideration will be funded by acquirer B/S cash
• GAP will pay for transaction and financing fees using GAPs B/S cash
• Transaction fees will be 1.5% of the offer value
• Financing fees will be 1% of the debt GAP issues to finance the deal

What is the Total Use of Funds (including debt, cash and equity) by GAP in this transaction?

• 3,009.60
• 3,045.00
• 3,000.00
• 3,054.60
• 2,945.40