Case 43 Fvc Rse

2422 Words Jun 28th, 2011 10 Pages
GENEVA BUSINESS SCHOOL
Master of Science in Finance
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ASSIGNMENT
Flinder Valves and Controls Inc.
Case 43

Student: Nguyen Hoang Ngoc Anh
Professor: Dr. John Heptonstall
Subject: Strategy and Financial

May 2011
NgocAnhNo1
1. Make a brief description of each company and its business activities . Flinder Valves and Control ( FVC) Flinder Valves and Control (FVC), located in Southern California, was come from a small company organized in 1980 for engineering and developmental work on an experimental heat-exchanger product. FVC was organized to acquire the properties, both owned and leased, of the engineering corporation in 1987 and it got the licensed patents after the product was brought to the
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Flinder feared that without a stronger partner, the company would be crush by competition. He was attracted by the thing that FVC’s company might be more fully valued if it were a part of a larger and more diversified enterprise. Thus, when the merger opportunity with RSE corporate in 2007, Flinder determined to make it work as best as he could. In addition, Flinder expected the merger to generate significant cost gains. RSE’s greater purchasing power would lower the cost of materials and components for FVC. RSE’s new resourcemanagement system could be expected to reduce FVC’s in-process costs. Flinder hoped that RSE would recognize the fair value of his company. 2. How large a premium do you thing RSE International will have to offer ? What should their opening offer be ? And should they be willing to increase the bid if the opening offer is rejected? Keep in mind that RSE us apparently not sitting on a large “war chest” of cash . and in order to make a cash offer will probably have to take out a bank loan.

2

The acquisition premium is the difference between the actual costs for acquiring a target firm versus the estimate made of its value before the acquisition. On May 1st 2008, FVC’s market value was worth is $39,75 (price close in exhibit 6) x 2.440.000 shares = $

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