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Flinder Valves

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Flinder Valves and Controls Inc. Acquisition

BACKGROUND
In early May 2008, talk began between president of Flinder Valves, Bill Flinder and Tom Eliot, chairman and CEO of RSE about a possible acquisition of Flinder Valves by RSE. The industrial manufacturing industry had taken a hit due to rough economic times and the acquisition made sense. Both leaders were very concerned about the challenges and risks of the deal. Flinder was a company that engineered and manufactured specialty valves and heat exchangers. These products required extensive research and development and they were one of very few firms working in these types of applications. A bullk to FVC’s sales came from defense and aerospace applications. They were known for their …show more content…

A couple disadvantages we found with the acquisition would be an increase of debt or decrease in cash holdings, depending on how we decided to fund the acquisition. Some people within our company worry about the dilution of our shares. We currently have close to 63 million shares outstanding and acquiring an additional 2.4 million will not dilute our earnings. Another concern we have is how well FVC employees will be able to adapt to our company culture and size of our company. FVC is a smaller, more entrepreneurial company and we are cautious of the risk that FVC engineers work ethic and productivity could change due to working for a bigger firm with a different cultural environment. As for some alternatives to not reaching a deal, we feel as though it would be best to reinvest money back into RSE or invest in other projects. Our R&D department has been extremely weak the past two years and we could benefit from investing in that. There have not been any recent new innovations within the company, and with reinvestment into the R&D department, we are confident that new innovations will be right around the corner. RSE has had their eyes on many other companies in the industry so we will not rule out possible acquisitions of those companies as an alternative to FVC.
RISKS
We are aware of a few risks with this possible merger that concern both

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