There are many advantages that would arise from a merger between Flinder Valves and RSE International. FVC produces very technically complex products for the aerospace and defense industry which include many of the simple products produced by RSE. This would create a strategic benefit between the companies since their products are complements of each other. RSE has divisions that produce products for industries such as: aerospace propulsion and control systems, nautical navigation assemblies, and components for missile and fire-control systems. RSE could further develop these divisions with the addition FVC’s team of advanced engineers who have extensive experience in these areas. RSE can also benefit FVC’s strong management team who greatly valued technological advances through research and development. Both companies have fairly new manufacturing plants with state of the art machinery. Both companies have adequate access to railways for transportation of product, in addition FVC owned a fleet of trucks. Financially, both companies are experiencing recent rapid growth in share price due to strong performance despite the weak economic environment. Both companies are already tough competitors in the respective fields due to their unique characteristics and a merger would create great synergy between the two companies.
Despite all the advantages there are a few disadvantages surrounding the merger. There seems to be a lack of clarity regarding the financial terms of the merger. The companies have failed to determine a cash or stock buyout and in what amount. There are also some inconsistencies between the stock since FVC is traded on the NASDAQ and RSE is traded on the American Stock Exchange. There is also the chance of possible antitrust action by the U.S. Department of Justice which has killed a merger deal for FVC in the past. Overall the merger seems very beneficial for both companies but FVC has been in several merger talks since the company became public...
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