Thornal Coachman
Dr. Brent
Financial Policy

Flinder Valves and Controls

Outline

I. Statement of the Problem

II. Alternative Solutions

III. Analysis of Alternatives

IV. Final Recommendations

V. Appendix

I. Statement of the Problem

Bill Flinders’ FVC was an outgrowth of a small company organized in 1980 for engineering and developmental work on an experimental heat-exchanger product. In 1987, as soon as the product was bought to the commercial stage, Flinder Valves and Controls Inc. was organized to acquire the properties, both owned and leased, of the engineering corporation.
FVC had come to RSE’s attention with the FVC’s disclosure of a U.S. government contract.
RSE manufactured a broad range of products including advanced industrial components as well as chains, cables, nuts and bolts, castings and forgings, and other similar products.
During the early part of 2008, a series of group meetings had taken place between Tom Eliot and Bill Flinder and their respective advisers. It seemed clear to both parties that both FVC and RSE could profit from the merger.
Eliot had persuaded RSE’s board that the company should follow a policy of focused diversification, which would be achieved by an aggressive growth-by-acquisition program designed to create opportunities and entries into more dynamic markets than the ones RSE then served.
FVC received various proposals from 1998 on, but none reached the stage of working out an agreement until the advances of RSE International Corporation.
By early May 2008, a broad outline of the merger seemed to be developing. Flinder Valves was to become a subsidiary of RSE International—the deal would be structured in such a way as to preserve FVC’s identity. The two sides had explored some of the governance and compensation issues in the merger.

II. Alternative Solutions