Pinkerton Case: Calculate the weighted average cost of capital (WACC) using the target capital structure of the deal and Wackenhut’s financial data as a guide.

After reading Pinkerton (A), write an analysis paper in response to the following questions:

 

Calculate the weighted average cost of capital (WACC) using the target capital structure of the deal and Wackenhut’s financial data as a guide. Show your work. How can Wathen justify a $100 million bid for Pinkerton’s?

 

Did the $85 million offer two weeks earlier make sense? What issues are involved in the bidding strategy for buying Pinkerton’s from American Brands? If Wathen proceeds with a $100 million bid, which financing alternative should he select? Why? How should Wathen respond to Morgan Stanley? Your analysis should present your observations regarding the data and financial strategies discussed in the case study.