This is so timely as a reporter just reached out to me for an interview on a similar situation. Debt vs. equity financing is always a challenging topic. There are 2 main reasons for this: 1) most firms really haven't calculated the relative cost of each (hint, equity ALWAYS cost more than debt; really!) and 2) they haven't analyzed their risk appetite.
Let's address risk first since it is such a hot topic in the media & our economy. The more debt you have financing anything the higher the risk of not being able to pay it back if all your plans don't happen on schedule. If you are highly confident that the combined entities will generate more than enough "net" profits to repay all the loans on schedule over their lifetime than you may want to use debt to finance the acquisition as it will be cheaper than the alternatives. This assumes your financials will support your request with the lenders.
That said, are you comfortable with that level of debt? If yes, go for it. If not, you may want to look at a lower level of leverage (the proportion of long-term debt vs. equity in the business). Since equity investors take a greater risk of not receiving their planned return in the event of default or bankruptcy than lenders, they require a higher annualized return on their money. This is either in the form of cash distributions (dividends) or calculated value (increase in the value of the firm annually). The more equity (compared to debt) financing a firm the lower the risk of default but the higher the relative cost. The opposite is also true.
There is no perfect answer or silver bullet. You have to decide a) your risk appetite, b) your ability to secure long-term debt, c) your ability to repay that debt and d) the probability the combined entity will meet/exceed your financial expectations over the long run.