Case 43 Fvc Rse

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Master of Science in Finance

Flinder Valves and Controls Inc.
Case 43

Student: Nguyen Hoang Ngoc Anh
Professor: Dr. John Heptonstall
Subject: Strategy and Financial

May 2011
1. Make a brief description of each company and its business activities . Flinder Valves and Control ( FVC) Flinder Valves and Control (FVC), located in Southern California, was come from a small company organized in 1980 for engineering and developmental work on an experimental heat-exchanger product. FVC was organized to acquire the properties, both owned and leased, of the engineering corporation in 1987 and it got the licensed patents after the product was brought to the commercial .Bill Flinder, the president of the predecessor company continues as the president of FVC. Auden Company, a large firm in a related field, was an important foreign distribution channels, about 15% of FVC’s Sales came from Auden. Foreign sales through Auden and directly through FVC’s own staff accounted for 30% .Half foreign sales originated in emerging economics, mainly Brazil, Korea, Mexico. The other half originated in the UK, Italy and Germany. FVC maintained many standard items, nearly 40% of its volume and 50% of its profits were derived from special applications for the defense and aerospace industries. Although competitive erosion in the mid-2000s, better economies conditions in the markets of developed countries and new products , that offered the

company excellent prospects for improved performance . Sales in the first quarter of 2008 grew 23% over the corresponding period in 2007. FVC’s plants, all modern construction, were organized for efficient handling of small production orders. From 2005 to 2007, net additions to property totaled $7,6 million. RSE International Corporation RSE International Corporation was founded by Tom Eliot in 1970. It was firmly rooted as a Russell 1000 company. Eliot persuaded RSE’s Broad to follow a policy of focused diversification for creating opportunities and entries into more dynamic markets than the one RSE the served. In 2003 from 2007, Net sales of RSE increased continuously and got a impress number above $2 billion in 2007 with a total assets of RSE grown up above 1 billion. Eliot and his team had initiated several changes to help increase RSE’s profit margins in 2006 and their project had already identified numerous opportunities for improving profits and sales. In 2008, RSE manufactured a broad range of products including advanced industrial components and sold them to various industrial users : One division produced parts for aerospace propulsion and control systems with a broad line of intermediate product , the second division produced a wide range of nautical navigation assemblies products .third division manufactured a line of components for missile and fire- control systems. RSE 1

international’s plants were ample, modern, well-equipped with substantially newer machinery and adequately served by railroad sidings. The firm was considered a low-cost producer that possessed unusual production knowledge. The current plan called for sales to his $3 billion within 5 years. Does the proposed acquisition make sense? Is there potential synergy, and if so will come from ? The proposed acquisition was valuable and significance with the both company .As Bill Flinder neared retirement , the idea of selling FVC to a bigger firm was very necessary .He had a good top management team beside him but he don’t believe any one of them who could run the management alone. He found stability in RSE international a combination which worth something to him. More over the acquisition bring to him and his company many advantage. In the increasingly global market place with more costly development, FVC’s company needed a stronger partner to expand and bankroll more research for finding newest products. Flinder believed that the company would also a...
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