What happens to the debt in an acquisition?

Unless otherwise specified in a contract, Company A bought the debt, too.

There are two options. The acquiree pays off the debt before handing over the compay to the acquirer or the acquirer assumes the debts of the acquiree which is the more prevelent route. The acquirer finds ways to manage the debt acquired from the cash tranche the acquiree has or by selling off it's assets or other cash generating strategies which it conjures up before acquisition. That is why many hybrid LBO's fail because of the 'poison pill route' the acquiree takes when a hostile take over happens. In the 80's the takeover of CBS by Ted Turner was thrwted by Lawrence Tisch the then Chairman of CBS this way.

In some cases, the premium is not so much buying incentive but to pay off the more onerous of debts the other company incurs. Sometimes the merger bargaining involves discussion of what to do with the debts.

Mergers can be a combining of peers, but usually a company subsumes another. The company taken over often had inferior resources to work with, including capital and debt issues. I've seen things where some units, say a region of stores were to be sold to pay off a debt issue that the buying company found disagreeable. Of course, they will also do that for other issues, such as one store chain I know sold its stores in a certain state because the union contract there held wages too high for their preferred model.

If it is a 100% buyout, the debt goes with the company. So B would be responsible for all of A's liabilities.

If it's not a 100% buyout, then the debt could stay with A, go to B, or be split, depending on the deal they make.

Company A gets the debt as well. When you buy a company, you get it all. The good, the bad, and the ugly.

A takes on the debt, but then they could spin off a business, tack on the debt and have the other company declare bankrupcy (I heard that SLE tacked on their debt to the spin off company HBI).

A assumes it.