A method of acquisition in which the acquiring firm exchanges its debt for shares of the target company according to a predetermined ratio is called a leveraged buyout.

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The method described in the statement is actually a debt-for-equity swap, not a leveraged buyout. A leveraged buyout is when a company uses a significant amount of borrowed funds to acquire another company, with the assets of the acquired company typically serving as collateral for the loans.

A Method of Acquisition in Which the Acquiring Firm Exchanges