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Merger

In: Business and Management

Submitted By ireshing
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Flinders Valves & Controls Inc. (FVC) is located in Southern California. The firm manufactured specialty valves & heat exchangers. About 40% of volume & 50% of profit come from special application for the defense & aerospace industries. RSE International Corp was founded by Tom Eliot in 1970. In the year 2008, it manufactured a broad range of products including advanced industrial components as chains, cables, nuts & bolts, castings & forgings etc. The firm is considered a low-cost producer that possessed unusual production knowledge.
The main issue discussed in this case study was the idea of merger between FVC and RSE could bring profit to both of the firms. First FVC become a subsidiary of RSE with the deal of preserving FVC identity. Then the two sides have explored some of the governance and compensation issues in the merger. The price of the deal was less clear as FVC traded on the NASDAQ and RSE traded on the American Stock Exchanges.
The benefits of merger and acquisition between FVC and RSE were the new firm will have an increased market share which reduces competition. This reduction in competition can be damaging to the public interest, but help the firm to gain more profits. However both FVC and RSE will have no control power.
However the question that has been discussed here was does FVC and RSE ready for merger and acquisition. The answered here is no as both firm didn’t analyze their current situation. Next both firm neither don’t have the proper discussion on the share holding distribution nor analyze their financial situation. The firms should have analyzed the merger and acquisition motives and also financial evaluation. Following was the identified issues in motives and also financial evaluation of both the firm;
A) Strategic Motives – Ignorance, No common vision and Due to diligence
B) Financial Motives - Market Price, Cash Rich, Highly

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