Filing Flows › Gap (GAP) › Takeover & LBO
Is Gap (GAP) a takeover target?
A leveraged buyout at today's price plus 30% ($29.13 a share) would return about 13% a year to a private-equity buyer over 5 years; no price, however low, gets a buyer to 20%. Historically 4.0% of companies with its figures were bought within a year (0.79× the average).
The buyout, step by step
| Entry | Amount | How |
|---|---|---|
| Offer price a share | $29.13 | today's $22.41 plus 30% |
| × shares | 362.0 million | |
| = Equity value | $10.5B | |
| + Debt refinanced | $1.5B | |
| − Cash | $2.5B | |
| = Enterprise value | $9.6B | 4.4× EBITDA of $2.2B |
| Fees | $191M | 2% of the price |
| New debt | $6.2B | 2.8× EBITDA at 7.65% a year; the limit that binds: 65% of the price |
| Buyer's own money | $3.5B | 36% of the cost |
5 years under the buyer
| Year | Revenue | EBITDA | Interest | Free cash flow | Debt left |
|---|---|---|---|---|---|
| Year 1 | $15.5B | $2.2B | $475M | $815M | $5.4B |
| Year 2 | $15.7B | $2.3B | $413M | $872M | $4.5B |
| Year 3 | $16.0B | $2.3B | $346M | $937M | $3.6B |
| Year 4 | $16.4B | $2.4B | $274M | $1.0B | $2.6B |
| Year 5 | $16.9B | $2.4B | $197M | $1.1B | $1.5B |
The exit and the buyer's return
| Exit | Amount | |
|---|---|---|
| Exit multiple | 3.2× EBITDA | today's trading multiple, before any premium |
| Enterprise value at exit | $7.9B | |
| − Debt left | $1.5B | |
| = Buyer's equity | $6.4B | |
| Money multiple | 1.81× | on $3.5B put in |
| Buyer's yearly return (IRR) | 12.6% |
Price against return
What the buyer makes at other premiums over today's $22.41.
| Premium | Price a share | Buyer's IRR |
|---|---|---|
| 10% | $24.65 | 21.5% |
| 20% | $26.89 | 17.0% |
| 30% | $29.13 | 12.6% |
| 40% | $31.37 | 8.2% |
| 50% | $33.62 | 3.9% |
The figures used
| Figure | Amount | |
|---|---|---|
| Revenue, last 12 months | $15.3B | |
| EBITDA, last 12 months | $2.2B | 14.3% of revenue |
| Depreciation and amortization | $512M | |
| Capital spending | $578M | |
| Debt | $1.5B | |
| Cash | $2.5B | |
| Share price | $22.41 | on Nov 6, 2026 |
Fixed rules, the same as the interactive view's starting point: the shares are bought at today's price plus 30%, the company's debt is refinanced and fees take 2%. New debt is the least of 5.5× EBITDA, 65% of the price and the amount whose interest EBITDA covers 2 times, at 7.65% a year (SOFR 3.89% plus the high-yield B spread 3.26% plus 0.5%, rates of Oct 15, 2026). Revenue grows 1.1% in the first year — the company's own rate, held between −3% and +8% — fading to 3% by year 5; the EBITDA margin, depreciation and capital spending stay at today's share of revenue; working capital takes 10% of each year's added revenue; tax is 27% of profit after interest. Every dollar of free cash flow repays debt. After 5 years the buyer sells at today's multiple of EBITDA.
What a takeover could cost
Takeovers on record paid a median premium of 32.5% over the share price before the deal (the middle half 20% to 51.8%), according to the 1,437 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Gap would cost about $29.69 a share, $10.7B for all its shares.
| Premium | % | Price a share | All shares |
|---|---|---|---|
| Low end (a quarter of deals paid less) | 20% | $26.89 | $9.7B |
| Median | 32.5% | $29.69 | $10.7B |
| High end (a quarter paid more) | 51.8% | $34.02 | $12.3B |
The odds, from history
Historically 4.0% of companies with its figures were bought within a year (0.79× the average). Its figures put it in decile 4 of 10 (10 = the most likely to be bought). The odds come from a model of every merger proxy, tender-offer response and going-private statement filed on EDGAR since 2011, set against each company's size, margins, debt, cash flow and growth the year before.
Gap's latest quarter
Gap, Q2 FY27: revenue $3.7B (-2% year over year), operating margin 18.5%, net earnings $501M, operating cash flow $337M. The chart follows the revenue to costs, profit and cash.
Questions
Is Gap being acquired?
No headline, 8-K or 13D about a sale is on file in the last year.
Could private equity buy Gap?
A leveraged buyout at today's price plus 30% ($29.13 a share) would return about 13% a year to a private-equity buyer over 5 years; no price, however low, gets a buyer to 20%.
What would a takeover of Gap cost?
Takeovers on record paid a median premium of 32.5% over the share price before the deal (the middle half 20% to 51.8%), according to the 1,437 merger proxies and tender-offer responses on EDGAR that state a premium. At the median, Gap would cost about $29.69 a share, $10.7B for all its shares.
Updated Nov 8, 2026. Read automatically from SEC filings and public data; errors are possible. Not investment advice.