MRC CASE
Executive Summary
MRC, Inc. is a Cleveland based manufacturing company specialized in power brake systems for trucks, buses, and automobiles; industrial furnaces and heat treating equipment; and automobile, truck and bus frames. As till 1957 most of MRC's sales were made to less than a dozen large companies in the automotive industry, it was exposed to the risk inherent in selling to a few customers in a very cyclical and competitive market.
Archibald Brinton, President of MRC, Inc., begun an active program of diversification by acquisition. The need for rapid diversification seemed compelling to minimize the risk and to explore new business opportunities.
After several failed attempt of internal diversification, they realized the lack of knowledge of their management about businesses outside the automotive area. So acquisition brought them quick fix where it brought already knowledgeable people in their respective areas.
By the end of 1960 the diversification campaign had resulted in five acquisitions, two of which were major transactions.
COMPANY’S ACQUISITIONS
MRC Inc. through its diversification program had resulted in five acquisitions. Below is the history of MRC’s acquisitions:
YEAR COMPANY
December 1957 Acquired J.O. Ross Engineering Corporation in exchange for 281,000 shares, added $27 million in sales.
March 1958 Acquired Hartig Engine and Machine Company, Mountainside, New Jersey, for cash and notes
October 1958 Acquired Transportation Division of Consolidated Metal Products Corporation, Albany, New York, and moved operations to Owosso, Michigan, Division
April 1959 Acquired Nelson Metal Products Company, Grand Rapids, Michigan, for cash
November 1959 Acquired Surface Combustion Corporation, Toledo, Ohio, for $23 million cash, added $38 million in sales.
After their fifth successful acquisition, the CEO of MRC Archibald Brinton faced with a dilemma of whether to buy American Rayon, Inc.
AMERICAN RAYON, INC. (ARI)
MRC, Inc. is a Cleveland based manufacturing company specialized in power brake systems for trucks, buses, and automobiles; industrial furnaces and heat treating equipment; and automobile, truck and bus frames. As till 1957 most of MRC's sales were made to less than a dozen large companies in the automotive industry, it was exposed to the risk inherent in selling to a few customers in a very cyclical and competitive market.
Archibald Brinton, President of MRC, Inc., begun an active program of diversification by acquisition. The need for rapid diversification seemed compelling to minimize the risk and to explore new business opportunities.
After several failed attempt of internal diversification, they realized the lack of knowledge of their management about businesses outside the automotive area. So acquisition brought them quick fix where it brought already knowledgeable people in their respective areas.
By the end of 1960 the diversification campaign had resulted in five acquisitions, two of which were major transactions.
COMPANY’S ACQUISITIONS
MRC Inc. through its diversification program had resulted in five acquisitions. Below is the history of MRC’s acquisitions:
YEAR COMPANY
December 1957 Acquired J.O. Ross Engineering Corporation in exchange for 281,000 shares, added $27 million in sales.
March 1958 Acquired Hartig Engine and Machine Company, Mountainside, New Jersey, for cash and notes
October 1958 Acquired Transportation Division of Consolidated Metal Products Corporation, Albany, New York, and moved operations to Owosso, Michigan, Division
April 1959 Acquired Nelson Metal Products Company, Grand Rapids, Michigan, for cash
November 1959 Acquired Surface Combustion Corporation, Toledo, Ohio, for $23 million cash, added $38 million in sales.
After their fifth successful acquisition, the CEO of MRC Archibald Brinton faced with a dilemma of whether to buy American Rayon, Inc.
AMERICAN RAYON, INC. (ARI)