BW/IP International, Inc

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Harvard Business School 9-293-058 Rev.5/26/93 BW/IP International, Inc. In the second week of June, 1988, executives at BW/IP International, Inc. were assembling materials for a presentation they would make to their bankers on June 15. They recently had agreed to acquire United Centrifugal Pumps (UCP) for $18.5 million. UCP 's product line complemented BW/IP 's extremely well and the managers of BW/IP 's pump division were eager to combine the two. Nevertheless, BW/IP 's bank lenders were expected to be somewhat less sanguine. Only a year ago, in May 1987, they had lent $131 million to finance a $235 million leveraged buyout (LBO) of the company. BW/IP had performed according to expectations since then, but it still carried total…show more content…
The Mechanical Seals Division (MSD) had sales in 1986 of $50.1 million and operating income of $7.8 million. A mechanical seal prevents leakage between a rotating shaft and a stationary casing in a wide variety of fluid transfer and control systems. MSD specialized in highly-engineered seals to meet demanding minimum-leakage specifications for hazardous applications (e.g., high-temperature, high-pressure, flammable, caustic, carcinogenic, and/or poisonous fluids) in industries such as petroleum, chemical, pulp and paper, power generating, and mineral and ore processing. MSD performed most of its manufacturing in California and Holland and, like Byron Jackson, maintained sales and service offices in many locations around the world. The Fluid Controls Division (FCD) was the group 's smallest, with net sales of $38.6 million and operating profit of $6.8 million in 1986. It designed and produced proprietary closed loop servo control systems and components, primarily for the U.S. aerospace and defense industries. In particular, FCD was a leading producer of pneumatic actuation systems (PAS) used for controlling the motion and position of fins on tactical missiles. In 1986 FCD was a key PAS supplier for Tube-launched, Optically-tracked, Wire-guided (TOW) missiles and it was developing similar systems for other types of tactical missiles. FCD also produced aircraft flight control systems

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