On a net present value basis, these are worth $2 billion, nearly double the equity premium being offered to Allegheny shareholders.
It is expecting to make nearly double its equity investment in the group, which no longer has any debt.
This is more than double the equity component of the biggest LBO in history, TXU in 2007, which was $32bn.
With double the equity, Morgan Stanley would now need to double profits, from a smaller pool of assets, to get back to its mid-2000s returns.
Melrose operates a buy, improve, sell model and is looking for its next £1bn-£3bn deal – with the target being to at least double shareholder equity on any deal.
In fact, Charles E. Ted Peckck, Ryland's chairman and chief executive, said the company aims to double shareholders' equity in each of the next five years - just as it has in every year for the last 17.
Long-term debt for the group totaled $499 million as of the end of 1997, roughly double shareholders' equity.
In addition, Chinalco also agreed to pay another $7.2 billion for convertible bonds that would double its equity stake in Rio to 18%.
Chinalco would also buy $7.3 billion worth of convertible notes that could double its equity stake in the anglo-Australian mining giant to 18%.
Under the proposal, Chinalco would purchase iron, copper, and aluminum assets from Rio Tinto for $12.3 billion and buy $7.3 billion worth of convertible notes that could double its equity stake in Rio Tinto to 18%.
