Please provide written answers, with supporting calculations and excel spreadsheet, tables, and other figures as necessary, to the questions below:
1. How can Wathen justify a $100 million bid for Pinkerton’s? Did the $85 million bid two weeks earlier make sense? What issues are involved in the bidding strategy for buying Pinkerton’s from American Brands?
2. If Wathen proceeds with a $100 million bid for Pinkerton’s, which financing alternative should he choose? Why?
3. How should Wathen respond to Morgan Stanley?