FIN680 CASE 43
FIN 680
Case 43: Flinder Valves & Controls (FVC)
Group 3
Pengfei Yang
An Wan
Zhiyu Rhen
Ricardo Reilova
Case 43: Flinder Valves & Controls Inc.
Case Summary:
I. Developments so far…
Bill Fender, president of Flinder Valves & Controls Inc. (FVC) and Tom Eliot, CEO of RSE International are trying to determine final details on RSE acquisition of FVC. Formal conversation have been going-on for approximately 3 months. During this time they and their respective advisors have:
Discussed broad motives and benefits of the merger
Discussed management issues
Governance issues
Executive compensation
No-lay-off for employees
Recent analyst predictions of: “Difficult/challenging borrowing conditions and restrictions in the US, warning about declines in the housing sector and reduced consumer confidence are pushing the manufacturing sector to reduce production” have begun to hang over the negotiations…
To finalize their agreement they need to agree to two (2) final major questions. How they will value both corporations and how they will pay for the acquisition of FVC; cash or stock or both.
II. FVC Summary
Is located in Southern California and specializes in the manufacture of specialty valves and heat exchangers. These products require expert engineering and industry knowledge which is one of FVC major expertise. The majority of their sales volume 40% and their profit 50% comes government defense contracts.
The company (FVC) have ready access to raw materials from multiple and competitive sources. Marketing arrangements present no problem; domestic sales are handled by a well trained staff of sales engineers, while international sales are done both through the internal sales force and through a non-exclusive partnership with Auden Co. International sales account for about 30% of FVC sales; split 50/50 with Auden Co. About half of the sales are done with developing economy countries like Brazil, Korea and Mexico. While the other half is done with developed
Case 43: Flinder Valves & Controls (FVC)
Group 3
Pengfei Yang
An Wan
Zhiyu Rhen
Ricardo Reilova
Case 43: Flinder Valves & Controls Inc.
Case Summary:
I. Developments so far…
Bill Fender, president of Flinder Valves & Controls Inc. (FVC) and Tom Eliot, CEO of RSE International are trying to determine final details on RSE acquisition of FVC. Formal conversation have been going-on for approximately 3 months. During this time they and their respective advisors have:
Discussed broad motives and benefits of the merger
Discussed management issues
Governance issues
Executive compensation
No-lay-off for employees
Recent analyst predictions of: “Difficult/challenging borrowing conditions and restrictions in the US, warning about declines in the housing sector and reduced consumer confidence are pushing the manufacturing sector to reduce production” have begun to hang over the negotiations…
To finalize their agreement they need to agree to two (2) final major questions. How they will value both corporations and how they will pay for the acquisition of FVC; cash or stock or both.
II. FVC Summary
Is located in Southern California and specializes in the manufacture of specialty valves and heat exchangers. These products require expert engineering and industry knowledge which is one of FVC major expertise. The majority of their sales volume 40% and their profit 50% comes government defense contracts.
The company (FVC) have ready access to raw materials from multiple and competitive sources. Marketing arrangements present no problem; domestic sales are handled by a well trained staff of sales engineers, while international sales are done both through the internal sales force and through a non-exclusive partnership with Auden Co. International sales account for about 30% of FVC sales; split 50/50 with Auden Co. About half of the sales are done with developing economy countries like Brazil, Korea and Mexico. While the other half is done with developed