Essay on Casae Flinder

2348 Words Dec 18th, 2012 10 Pages
Contents:
1. DESCRIPTION AND GOALS OF THE CASE
2. QUESTIONS YOU MUST ANSWER IN YOUR REPORT
3. APPENDIX 1: CONFIDENTIAL SUPPLEMENTARY INFORMATION FOR MANAGEMENT OF FLINDER VALVES AND CONTROLS
4. APPENDIX 2: CONFIDENTIAL SUPPLEMENTARY INFORMATION FOR MANAGEMENT OF RSE INTERNATIONAL
5. SUPPLEMENTAL TECHNICAL NOTE: VALUATION AND MERGER NEGOTIATION

CASE 43: FLINDER VALVES AND CONTROLS INC.

DESCRIPTION AND GOALS

SET IN MAY 2008, THIS CASE REFLECTS THE SEPARATE PERSPECTIVES OF CHIEF EXECUTIVE OFFICERS TOM ELIOT AND BILL FLINDER AS THEY APPROACH THE NEGOTIATIONS OF RSE INTERNATIONAL CORPORATION TO ACQUIRE FLINDER VALVES AND CONTROLS INC. YOUR TASK IS TO COMPLETE A VALUATION ANALYSIS OF THE TARGET AND BUYER AND TO NEGOTIATE A PRICE
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As founders and significant stockholders in their respective firms, they liked and respected each other. Flinder hoped that RSE would recognize the fair value of his company.
Appendix 2

FLINDER valves and controls inc.

Confidential Supplementary Information for Management of RSE International

Flinder Valves was the first among several potential targets identified by Catherine MacAvity, RSE’s vice president of Business Development, and the architect of the acquisition program. Eliot approved the choice and believed a smooth and successful acquisition of FVC was critical to RSE’s expansion plans. Recent news in the U.S. credit markets had been grim. MacAvity worried that the news in the financial markets might chill the ongoing talks. If the merger fell through after going this far, Eliot feared his board might become discouraged. On the other hand, if FVC was acquired at too high a price or failed to produce adequate returns, the RSE board would be unlikely to give its full support to future mergers.

In planning RSE’s expansion, Eliot had considered several companies as possible acquisition candidates. Eliot was seeking a small, well-managed manufacturer that could offer RSE strong growth opportunities and bring it more specialized, higher-technology products that would be less susceptible to succumbing to the competition. Although RSE had done well, Eliot felt the

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