Mergers: Background and Current Issues

" Congressional Research Service The Library of Congress NORTHERN KENTUCKY UNIVERSITY Washmgton D C 20540 LIBRARY MERGERS: BACKGROUND AND CURRENT ISSUES IP0193M A wave o f merger a c t i v i t y s t a r t e d i n May 1981 and swept t h r o u g h t h e American b u s i n e s s community. The d o l l a r volume o f m a j o r a c q u i s i t i o n s i n 1.981 exceeded $82 b i l l i o n , a n i n c r e a s e o f 86% over 1 9 8 0 ' s d o l l a r volume o f $44.3 b i l l i o n . There were 113 s e p a r a t e m e r g e r s i n 1981 t h a t exceeded $100 m i l l i o n , and s e v e r a l o f t h o s e exceeded $1 b i l l i o n . Why, when many b u s i n e s s e x e c u t i v e s a r e q u e s t i o n i n g t h e s t a b i l i t y of t h e U.S. economy, a r e c o r p o r a t i o n s s o e a g e r t o buy e a c h o t h e r up? How a r e t h e F e d e r a l Trade Commission, S e c u r i t i e s and Exchange Commiss i o n , and t h e Department o f J u s t i c e i n v o l v e d w i t h m e r g e r s and a c q u i s i t i o n s ? What were t h e l a r g e s t m e r g e r s of 1981? T h i s I n f o Pack e x p l a i n s v a r i o u s t y p e s o f m e r g e r s and a c q u i s i t i o n s and p r o v i d e s m a t e r i a l s r e l a t i n g t o t h e r e c e n t wave o f m e r g e r s . C o n g r e s s i o n a l Reference Division GOVERNMENT DOCUMENTS COLLECTI0N Congressional Research Service The Library of Congress Washmgton. D.C. 20540 CORPORATE MERGERS IN 1981 INTRODUCTION .................................I MEASURING MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Types of Mergers . . . . . . . . . . . . . . . . . . . . . . . . . 3 Small Business Mergers . . . , . . . . . . . . . . . . . . 4 Hostile Tender Offers . . . . . . . . . . . . . . . . . . . 5 High-Cost Mergers . . . . . . . . . . . . . . . . . . . . . . . S CREDIT CONCERNS ..............................6 RELATED CRS PUBLICATIONS .....................8 Kevin F. Winch Specialist in Industry Economics Economics Division January 29, 1982 CORPORATE MERGERS IN 1981 INTRODUCTION Attempts to acquire control of U.S. corporations in 1981 made headlines from the beginning of the year to the end, with the battle for Conoco receiving the most attention. As Fortune magazine noted recently: Last year was a fabulous one for big deals, for the people who helped make them, and for the shareholders of companies other companies coveted. Du Pont, with 1981 sales approaching $15 billion, brought off the biggest corporate deal in U.S. history when it swooped up Conoco, white-knight fashion, and rode off with the hefty damsel, whose sales are about $5 billion greater than Du Pont's own. The gesture cost Du Pont shareholders $7.2 billion, earned a total of about $29 million for the principals' respective investment-banking firms, and helped kick Conoco's 11 stock up almost 100 percent. Particular merger bids in 1981 were considered newsworthy for one or more of the following reasons: the noteworthy size of companies targeted for take- over; the hostile reaction to some of the larger merger attempts; the antitrust implications of some of the proposed mergers; the control of U.S. corporate assets by foreign entities; the impact of merger activity on the general availability of credit; and a multitude of tangential questions (Is bigness necessarily bad? Is industrial concentration-especially in energy-rapidly eroding compe- tition? Are the interests of individual corporate shareholders adequately protected?). One problem in dealing with these important questions has been the absence of a general perspective on mergers in 1981 in which to view individual merger 11 Meadows, Edward. p. 36. Deals of the Year. 3 Fortune, v. 105, January 25, 1982. bids. In general, the media have focused on particular merger attempts, without trying to view these efforts in a context of overall merger activity. This paper summarizes recent studies of the level of merger activity in 1981, identifies some of the highlights of that activity, and presents commentary on merger credit. MEASURING MERGERS There is no authoritative measure of total merger activity in the United States. Even though often criticized, measures of economic activity such as the money supply, consumer price index, gross national product, unemployment rate, industrial production, et al., are generally published by Government agencies and accepted as definitive indicators of the subject activity. In contrast, there is no Government agency responsible for collecting and disseminating information on corporate mergers. As a result, there are no uniform standards for measuring mergers so that even when considering a very small universe of data, reputable analysts can fail to agree on the appropriate measure. For example, in consider- ing 1981 mergers, W. T. Grimm & Co. notes that "There were 12 transactions valued over one billion dollars during 1981, while 1980 witnessed only 4 such transac21 Fortune magazine, on the other hand, has identified eight merger tions." 3/ transactions in 1981 with a value exceeding $1 billion. - Different methods of collecting data, of processing data, and of analyzing data can lead to measures of merger activity which are in general agreement but 21 W. T. G r i m & Co. Announces Record Year in Mergers. Press release. ~ a n u a ? ~12, 1982. (This is the source for all other information ascribed to Grimm 6 Co. in this report unless otherwise noted.) 31 - Meadows, Deals of the Year, p. 37. ' nonetheless vary widely in detail. This caveat should be kept in mind when considering the information which follows. Types of Mergers Chicago-based W. T. G r i m & Co. notes that "Its merger data bank is considered to be the oldest and most extensive of its kind." Using this data base, G r i m & Co. compiled the following categorization of merger activity in 1980 and 1981. Table 1. Composition of Acquisition Announcements 1980 1981 - Divestitures Acquisitions of Publicly Traded Companies Acquisitions of Privately Held Companies Acauisitions of Foreign Sellers Total Announcements: 666 173 988 62 1,889 830 166 1,332 67 2,395 % Change 24.6 - 4.1 34.8 8.1 26.8 Source: W. T. Grinrm & Co. (Percent calculations by CRS) Perhaps the most striking statistic in Table 1 is the very small number (166) of publicly held companies which were the subject of acquisition announcements in 1981. This relatively small number of attempted mergers included 75 tender offers for publicly traded companies. A tender offer is the attempt to take control of a company by bypassing the target company's management and making a direct bid to the shareholders, asking them to present their stock for purchase. Almost exclusively, merger attempts through the use of tender offers were the subject of media attention and congressional concern in 1981, yet ac- cording to the data compiled by Grinm & Co., they constitute only 3 percent of all acquisition announcements in that year. Small Business Mergers Mergers involving small companies, especially the privately held companies noted in Table 1, are generally regarded as positive, or at worst neutral. The following comments indicate different approaches supporting the acquisition of smaller companies. The acquisition of independent entrepreneurs may provide people the incentive to start new companies by rewarding a lifetime of work with the lucrative sale of a successful small business. Some mergers may also have a larger public benefit in that the small entrepreneur may not have the same capital or marketing expertise to exploit his new ideas that the larger acquiring firm can provide. 41 A given takeover may be "productive" in the sense that it may strengthen management, generate resources for increased investment in improved facilities, produce economies of integration or scale, and especially in the case of smaller enterprises, provide for or51 derly transfer of ownership from one generation to another. Although depressed conditions make merRers and acquisitions more likely, these types of deals are transacted for a number of .in the case of a closely held company, different reasons. you'll often find that mergers in bad times mean that an owner just isn't able to make ends meet, and is forced to sell out. 61 . 41 James C. Miller, 111, Chairman of the Federal Trade Commission, quoted in Scxeibla, Shirley Hobbs. What the FTC's About. Barron's, January 25, 1982. p. 11. 5 1 Schultz, Frederick H. (Vice Chairman of the Board of Governors of the ~ederalReserve System). Statement before the Domestic Monetary Policy Subcornmittee on Banking, Finance and Urban Affairs, House of Representatives. December 11, 1981. p. 3. (Duplicated.) 61 Tomislava Simic, Director of Research, W. T. Grimm C Co., quoted in Merger The New York Times, January 2 4 , 1 9 8 2 . p. F 2 2 . ever-unabated. CRS -5 Hostile Tender Offers As a method of acquiring a company, the tender offer is usually attractive for two main reasons: it is quick, and, most of the time, it is successful. A hostile tender offer refers to a tender offer which is resisted by the target company's management in a series of moves and countermoves analogous to battlefield tactics. The takeover bid and the defensive maneuvers, especially when large companies are involved, become newsworthy items; 1981 examples would include Conoco vs. Dome Petroleum, Seagram, and Mobil; and Grumman vs. LTV. With all the public exposure to hostile tender offers, it is instructive to observe the total activity in 1981. G r i m h Co. "noted that 1981 witnessed the highest number of hostile tender affers ever recorded..." by their research department. 71 compiling data on mergers since 1963. - firms. The results of the resistance: The company has been Takeover attempts were resisted by 28 13 companies (46 percent) were acquired by the original bidder; 9 companies (32 percent) were acquired by a firm other than the original bidder; and 6 companies (21 percent) successfully defended their independence It would seem that while it is clearly possible for a company to survive a tender offer, it is more likely that the original tender offer or a more attractive alternative offer will succeed. High-Cost Mergers According to G r i m h Co., the total dollar value of all merger transactions has been increasing steadily, primarily because of the increasing number of takeover bids for large companies; they note that "Completed or pending transactions having a purchase price of $100 million or more numbered 113 in 1981, compared with 94 in 1980." 71 - Ibid. Their record from 1975 to 1 9 8 1 is shown in Table 2. Table 2. Year Source: Large Corporate Mergers Number of Transactions Valued at $100 Million or More W. T. Grimm & Co. The following comment by the Chairman of the Federal Trade Commission is an indication of the present policy toward large mergers: Arguments about the centralBigness isn't necessarily bad.... ization of power in the economy are greatly overblown. It's stayI wouldn't anticipate ever ing about the same as it has been.... seeking to enjoin a merger because it would be too big. But I would go after one, big or small, if the effects would be anticompetitive I want to dispel the argument that laxity in enforcement is solely responsible for the big merger wave we're experiencing. There are a lot of other motives for mergers-tax incentives, technology changes and overall economic activity shifts from one type of goods or service to another. 81 .... CREDIT CONCERNS The first session of the 97th Congress witnessed a general concern about the effects of monetary policy based on a perceived relationship between high rates 8/ - Scheible, What the FTC's About, p. 11. of interest and the allocation of bank credit to finance large corporate mergers. 91 This sentiment was reflected in a number of congressional resolutions introduced in the 97th Congress, 1st session. This concern of the Congress is generally reserved for the financing of large mergers; the following table provides an indication of the relative importance of different methods of financing corporate acquisitions. Table 3. Financing of Large Mergers in 1981 Total Value (millions) Financine Method Cash Only Cash and Securities Exchange of Common Stock Total: Source: Number of Transactions $21,813 14,110 4,090 25 8 6 $40,013 39 Compiled by CRS from data published in Fortune magazine. (Meadows, Deals of the Year) Because the appropriate data is not available, it is not possible to analyze the effect of merger credit extensions on the banking.system or financial markets. Policy makers who have commented on the role of credit to finance mergers have generally expressed little or no concern. The position of James C. Miller 111, Chairman of the Federal Trade Commission, was recently summarized: In Senate testimony, Miller observed that even though the current wave of takeovers is soaking up billions of dollars of credit, it 91 See, for example: p. 8, 9 in U.S. Congress. House. Committee on Banking, Finance and Urban Affairs. Monetary Policy for 1981. Sixth Report by the Committee on Banking, Finance and Urban Affairs together with Additional, Minoritv, Supplemental, and Dissenting Views. 97th Cong., 1st sess. Washington, U.S. Govt. Print. Off., July 31, 1981. need not boost interest rates, which monetary policy can control. Moreover, he declared, merger borrowings aren't really so large, compared with the total amount of credit in the economy. 10/ In a similar vein, the position of the Board of Governors of the Federal Reserve System was presented to Congress: I would point out that the several highly publicized merger deals this year have in reality had quite limited impacts on credit markets. The credit flows involved in actually consummated transactions have been considerably smaller than suggested by the aggregation of credit lines that were arranged, including those by unsuccessful bidders. Moreover, mergers generally involve only a transfer of ownership of existing assets and do not tend to absorb the real savings in the economy. Stockholders who sell out obtain funds that are available for reinvestment or for loan repayments, thereby recycling these funds into credit markets. I do not want to suggest that we should be complacent about takeover loans. They may in some cases be a cause for concern and they should be given close scrutiny. Moreover, they can have a somewhat inhibiting effect on short-run flows of credit. In committing themselves to a large volume of takeover loans, banks may restrict for a time their lending to other potential borrowers, but any such effects should normally be quite small and of short duration. 11/ - RELATED CRS PUBLICATIONS U.S. ---- ------ -- Library of Congress. Congressional Research Service. Corporate Mergers: Selected References, 1980-1981. Bibliography L0067, by Kurt Beske. January 4, 1982. Corporate Mergers through Tender Offers: Measurement and Public Policy Considerations. Report No. 81-260 E , by Kevin F. Winch. December 4, 1981. Merger Tactics and Public Policy. cato. Report No. 82-13 E, by Carolyn K. Bran- The Role of Secured Bank Credit in Corporate Acquisitions. 186 E, by Kevin F. Winch. August 13, 1981. Report No. 81- Selected Mergers and Acquisitions in the Natural Resources Industry, 1981: Case Histories and Financial Profiles. Report No. 81-205 E, by Jeffrey P. Brown. August 21, 1981. 10/ - Scheibla, What the FTC's About, p. 11. 11/ - Schultz, Statement, p. 3. Some Corporate 'Marriages' Blossom but Others Will End in Disaster and Divorce NEW YORK-When Internatiorul Paper 00. quircd General etudecO.forH86million~lslCit looked like a great deal. Ehnerging aa the winner of a bitter bidding contest with Dow Cbe- *"" Wlth merger mania" raceplng the nation. critics of big business are calling for closer m t i n y of the imton firm's petroleum meeta and i t 6 pact of mergets on acquired and acdnl.hng ape&€?, which Intarrpquiring companies. rtockholders. tionalPaperhopedtoputtouwin employees and the nation's emdeveloping tbe oil it bad d i r c r r v d nomic health. Not that merger8 art on ita own ocrcolge. anything new in American M But this wsmmgly l o w Mncss. monomists have identified ness combination tuned out to be a three previous mergers waves thie mismatch The company's own pacentury, and many believe we are per businam,with its varrciora 8pcurrently enveloped in a fourth. But petite for capital. had been UPwd each successive wave sets of£politwith an oil d d h q enluprbe whme cal alarms in Washington and genhuge up-front apecuxeded erates heated debate on the values its cash flow. A cMce had to be -and the dangers-of bigness in made, and five yeam ofta the merAmerican industry. ger Intcrtr~tionalPaper opted to fo~ l t s b z s i ~ ~ , ~ o f f f oThe r current controversy is the result of a spectacular string d S802millionthecompanyitM fought hud to .eqrrin. marriagesthisyearbycoaparPtc@ants. Last month's bidding contest C~MKY) Inc., won by DuPont 4 for International Paper's hond#nae Co. at the ntratoaphaic p r i a of $75 profit of $316 W o n on lhe deal W o n . was only the most recent helped obecw an unpleasant Wand costliest. Other mergen anty: the once-ambitioue plan to camnounced 80 far this year include bine two companies had ended tn American Ekpms Co. and Sheamon fadure. Though not all mergers unLoeb Rhoades hc.; Nabisco Inc. and ravel m quickly. business analy8ts Standard Brands Inc; Standard Oil estimate that roughly half of dl acCQ. of Ohio and KonaccoU Corp.; quisitions fail to iive up to their and Penn Central Coop. rad Cdt IDpromise and end up as divestitures. dustries Inc. 'The aura of good feeling and Forthetintrbtmontbsdthe high expectation that m u n d s the closing often gives way to dist~'W, year, W.T.Grimm a, W M C tracks ~ disappointment and recrimination." merger activity. reports 1.184 rays Allen H. Seed III. senior contransactions worth a value of $35.7 sultant for Arthur D. Little Manbillion. almost equal Ute total paid agement Counseling. during all 1980. What often looks like a fine fit on The blitz has kicked off a barrage paper gives way to the realities of of charges by critics cammned the business world once the two about the effects of greater comlicompanies merge. dation on the sagging U.S.economy. Some economists, kgi8lators and "Companies (planning to merge) can make finandat ~ ~ h o l a contend rs that the nation. beset by low productivity, high inprojections three to five flation, high interest rates and slow yeam ahead" says Jack Hengrowth. can ill afford to have its larnessy, managing director of gest corporations spend crucial inFirst Boston Cap., an investment dollars to buy each other vestment banking finn inrather than spend on modem plant volved in a number of mcgera. and equipment to createjobs. "But there u e m many external variables that the pmjectione can be "Mergers do not m t e M y off by a lot. either high or low." needed new investment in modem facilities to reindustrialize America." says economics professor Walm i d CQ.. tbe paper concern Claimedtwo~theglrpllHOCYI- ~ In the International-Generd Crude case, the critical external vrriable was .escalating tnllotion in the late 19708. which walloped both businegles by toteing the cust of ttr Adan#. post president of Michi#an State University, r'hese mer~ e r represent s a rearrangement of the deck chair8 on the Titanic." Defenders of consolidation, on the other hand, Prgue that mergers promote economic efficiencies and economies of d e , which in turn translate into lower prima f a consumers, Y wedl 0s cDoble companies to ampete a m e effectively in i n W tional marketa. John Shad, chairman of the Securities and &change Commission. rays. "(Mergers produce) a net economic gain by and large." Despite a camde of uticles md testimony for and against, an Msessment of the impact of big m a gers Ls mtbjective and not d l y reduced to quantitative nsults. "You can't judge a particular campany by its , kau# you can't tell what would have happened if it had not merged," rays Alfred Rappaport, a professor at Northwestern Univereity's graduate school of busin-. Nonetheless, a few st&. dthough tentative and out of date. have concluded that areass in the merger game is elusive at ksf and that acquisition-minded companies apparently fare no better than . counttrpvtsunaffllctcdby~ fever. Fourteen cc0su)rmas working with the International Institute of Management in Berlin,West Cermany, analyzed 765 mergers that occurred between 1962 and 1972 in Europe and the United Stam.The economists found that in the seven countries atuhed, the megar, generally drd not increase the profits of companies analyzed. nor did they iacrepse thc growth rate of firms mearund by ualer or aaeets. "ln the United States. not only did mergers not increase profit@or aales. but we oLso rew a dgmf~unt decline in growth rates of companies that had merged," rays mf. Dennis C. Mueller. an econormst at the University of Maryland and a participant in the study. L . 4 .TiMES SEPT. 27,I981 ~ e s s i c n a . %search 1 Service, with permissicn of the w i g h t claimant. II Where Purchase Top Ten of 1981 The 10 largest completed or pending mergers, ac uisitions or divestitures throug August % Vaiw in BUHars of M h r s Du Pont Co.lConoco 11%. .............. .8.04 Elf AquitaimlTewsgulf Inc. .............4.3 Auar Corp.lSt Joe Minerals Corp. ....... -2.7 Standard Oil of OhiolKennecott Corp.. ....2.06 W s c o hrc.lStandard Brands 11%. ........1.8 Cdt 1.dustries IncJPenn Central Corp.. ...I36 Amer~canExpress Co.1Shearson Loeb Rhoades Inc. ....................... .0.943 Canadian Pacific Enterprises Ltd.1 Canadian International Paper Co. divested b International Paper Co.) ....0.880 cidental etroleurn Corp.llowa Beef Processors Inc. ......................O.791 GK Technologies 1nc.lPenn Central Central Corp.. ...................... .0.699 & ir Satrcr: W.T. GrAnm 6 Co. Concerned that three to five years was not sufficient time ta aliow for improved profitability, the researchers turned to an examinabon of stock pnces, reasoning that if mergers promise future profit increases, those expectations should be reflected in the prices of the acquiring companies' shares. The result: in all companies surveyed, performance of the acquiring company's stock was worse three years after merger than it was at the time. Despite the study's conclusions, a look at the record suggests that for every merger that ends in a messy divorce, there may be another one that is a perfect marriage. In some extreme cases, badly exeuted mergers have seriously imperiled a company's survival, with severe penalties to both employees and shareholders. Dlnrtroor Merger In 1968, Lykes Corp., a holding company engaged primarily in the steamship business, acquired the steel company Youngstown Sheet & Tube Ca. with disastrous results for both. Lykes used Youngstown's S100 'Ilion annual cash flow not to mod2 the manufacturerk plant and equipment in order to make it a more efficient competitor, but to pay interest and charges for loans to finance the merger and to subsidize shipping operations. By 1978 Youngstown. under pnssure from foreign imports, was losing hundreds of millions of dollars on its steel operations. and its future. a8 well as that of Lykes, looked dim. Ironically. it took a second m a ger to undo the damage of the first. Lykes agreed to merge with LTV Corp., owner of marginally profitable Jones & Laughlin Steel. on the theory that combining the two steel companies would produce one efficient competitor with market heft. The Justice Department allowed the merger under its "doctrine of failing companies." After closing several plants and laying off thousands of workers, the new Jones & Laughlin has pumped out a continuous stream of profits. The company earned $69 million during 1980. a disastrous year for Please rct MERGERS, Pmge 2 r W steel, and during the first half of this year ham racked up $158 million in profits. Lester Wells. LTV's director of corporate information, says. "Everythmg r e aq#ctsd from the merger has worked out." Another test of merger strategy is going on today at Pan American World Airwaya So far, the seriously ffl Pan Am has been unable to succegafully integrate the domestic operations of National Airlines, acquired in 1980.into its vast internationalnetwork. The airline ha8 cut salaries of executives 10%and ia preparhg to rlaah routes and lay offthousands of employees. Defenders of merger, however. remain convinced that in many cases there are substantial benefits to be gained. "One or two years is not enough time to judge whether a merger is a success." says First Boston's Hemeasy. "In many cases a merger energizes a company, either the acquiring company or the acquired bueine8a Most companies fail ultimately because they are exhausted because they no longer have the creativity and energy to compete. A successful acquisition enagbe8 both sides. And it's very hard to measwe.'' Millet Beaefltd Examples cut a c m many induatriee. Miller Brewing Co.. which merged with Ph&p Mo& Inc. in 1910,benefited handsomely from the big cigarette manufacturefa bountiful cash flow and marketing expertise. With Philip Morris as a partner. IWer in the past decade has jumped to the No. 2 spot, behind Anheuser-Busch Coa. from N a 5 in the fiercely competitive beer industry. Time Inc. prospered and gained a new directionM the result of acquisition8 in cable television. The big New York company. concentrated principally in the slowgrowing magazine business a decade ago, made a key purchase in 1978, American Television & Communications Cur@,which has more subscribers than any other system Combining ATC with Home Box Office. the nation% top pay-TV programming network, Time today is positioned to capitalize on the explosive future of cable W. While the company's $97 million in pretax imcome from magazines and books in 1980 was flat, compared with the $37.5million earned in 1977. profits from video activit~eshad skyrockeled 12 times to $72.5 million from $6 m~llion. A host of mergers among investment banking housm in Wall Street are widely believed to have strengthened IDM of the entrepceneLvial team." conee~ueace,he said, the more creative employed resign fird"The final result b the dbpmml and ultimoK . ' To business obeervem, them's a logk to the or failure of a merger. They believe the evidence suggests that acq~llAItio~ related to a company's principd budncy generally meet with better r d t a than thom In ~ e l i t e fields. d -. - who has UCLA assistant ~ r o f e s o Richard r -- - Rumelt. res-earthed diversi&cation merger8 over the past de---.-.~ cade. concludes. "One strong, persistent result (of the &kh) is that unrelated b-bineae firms don't do well. A bunch of businessmen, who believe they could identify undervalued companies, would be W t e r off to speeulate idthe stock market than buy (the companies)." The example of failure in drverslfication most often citad b the 1914 acquisition by Mobil Corp., the nation's second-largest industrial firm, of Marcor Inc. the big Chicago-based retailer that own8 Montgomery Ward & Co. Ward's earnings began to slump in 1978, then skidded into the red during 1980. Over the past 15 month, Ward has lost $210 million, despite a Wb-millinncorh infusion from htodquartelnlortyspt. Eau.P8um Critics oleo point to Exron Carp.%controvvsiPlSl.2billion acquisitionof Reliance ElectricCo. two years ogo as a notable flop. As justification for the merger, &xon said it had developed an electronic control for motom Craativit~ Eltifld would aave mightily on the nation's fuel bill by alThus, while bueinees combinatiom can relcreo- that motors to use less electricity. Enton said it needtive energy, the opposite is also true: in certain cprer, lowing ed Reliance, a leading Cleveland-based motor manufacparticularly when amall. innovative componles are ac- turer, inorder to introduce the new technology rapidly. quired by big corporation% the newly eoquired However, Reliance exeeutivee testtfied at antitrust bureaucracy stifles creativity. to In testimony before the H o w last year, ConM Dnta hearings that they d d not need Emon's amistance t r y asCorp. Chairman William C. Norria-who once quit a develap such a device. Further, ail l n d ~ ~ ~criticr small computer company after it was acquired and subsequently started Control Data-described the pmccsa "After the acquisition of a smaller company. .tbe larger acquiring organizationblankets the other with its bureaucracy," N o d said. "The small company is confronted with layer upon layer of parent company management, which often is more adept at b l w h g , than making, decisions, and . . .propof& for new product8 languish in limbo for months." Once a project is approved. Norris added. thereO "the foot-dragging, madbloclung administrative proceaea that have to be contended with" to carry it out, &I a t-' that o n c e - m w iadu~try.M d Lyach & Co, for erample. gained considerable stature in corposrtetinance after it acquired White, Weld & Co. in 1W8. Sheamon/American he.,formerly Shcueaa Loeb Rhoades, grew to become the recond largeet investment banker and by far tho moot profltobla, through a strlng of 11mergen ettgimad by Ulr ohirman,Sanford Welll, over 15yeThough aII the evidence ie not yet in, 8ome'analystr oleo point to the a.7-bllllon aquisltion of Belridge 011 Co. by Shell 011 Co. in 1979 an an example of fruitful merger. By thls ent, Belridge, a tiny Kern County oil producer wi potentially vast but hard-to-produce heavy oil deposits, should eventually recover fat more of the tar-like crude beneath its acreage because Shell ia a leader in technical reeearchon new metboda of enhanced recovery. While current techniques are capable of producing only 30% to 40% of the heavy oil.Shell's future methods are expected tg make it poadblafur Belridge (0 recover far mom. But the resources of a huge new owner often coma wrapped in red tape. One executive of a maW oil company, who asked not to be identified, baa been involved in three takeovem. He says he can call on the e x W h of hie company's 40.000 employees to solve a probLem. but "sometimes you don't have a way of getUag to the personwhoLsmakingthe~ MERGERS: Some Corporate Marriages May End in Divorce MERGERS: Blockbusters d e d Gnon at the time of the merger, contending the company wes exaggerating the mgnificance of i t 6 technologyinardertowe~ts fromtheenetgyaieiSin1879tOe~pand into new businesses. Last March,an embarrassed %on quietly ~ 1 ~ ) u n c ite dwas abandoning the revolutionary devlce kcause it had proven unreliable. Perhaps the most glaring examples of how poorly unrelated busiaenses fit bgether are the conglomerates built d m the leet big ,merger wave of the 1960s. Their tpectacular growth made them the darlings of Wall Street during the latter half of the decade. But that vigor proved to be illusory 8s many did to the brink of bankruptcy in the ncession that ushered in the 19708. LTPEit8LYI .Notable anang them ros the m v e of lugh-flya Ling-Tunco-Vought. Z T V bmt more maney during the past four yeam than it bad made in the previous 10," For- - drive to build a diversified food con glomerate. has sold more than 20 units in the last two years. Last June Beatrice spun off Dannon Co.. maker of the nation's lead fng yogurt Though Dannon ta perhaps Beatrim's best known nation d brand, the yogurt maker encountered problems expanding into las Angeles and otiff competition from newer entrants in the market. When the Fknch yogurt producer BSN-Gervais Danone, eager to gain a foothold in the lucrative US. market, offered $84.3 million for Dannon. Beatrice quickly rhook hnds onthedeal. - - - .-- The divestiture relord is undoubtedly beld by NL Industries M., 8 New York-based chemicals companythathnstrimmedmfcna tban6obuginegiesinrrcmtyear6 inmefforttorhiftitsfocustotht pmfitable oilwell cervices busbegs, where return en investment can surpass the amnpany'r new target of 20%. Fbght now the company has fourbusinessesonthebloctfora btPl of $150 millian. aad Eemark lnG,-tht s6-Mllion However, LTV's fortunes-rrrd its merger atategy-have im- company with headquarks in CBicaga, embarked on a massive divesproved in r e c a t years. LTV M week offered to buy 70% af the titure diet last year that slimmed i& substantially.When Prmart dares of Grumman Corp. in a deal -1e wurth $450 million Both companies determined the 8ums rcquhrd to a leaders in militpry aircraft p- drillforoilmdgaswar!toobradeneome, the company add ttr duction Ftecently, a number of !he um- Vickers Eslegy Co. in 1980 for $1.1 glornerates built in the 1960s bave billion, then divested most of Switt been winning off vPriws buei- IrCo.thisyeatforS375millionin nCS8es in m effort to strrnmline m ∨ to diversify away from their companies-the exact opposite cammodity pmducts. The result: ofthe strategy that won them favor though the company's sales me only abouthal£~~big~~theywtretno 15 Yoga rcprsaga,thepriceofits~hs emmonht&la about doubled an Wall Stnct ' b¶alcolm S. salter m d wolf A The national debate over the dWeinhold, in a Harvvd Univaaity h of buainess cornlidation report entitled "Merger ??en& Pnd would be considerably 6impler ifrll Praspccts for the 198as," mid about raults were either clearcut rucbalf of dl carporate 8cquisitions ccsses or failures. The pmblaa is. aince 19'75 bave been mmebody bowever, that in moa cws,the reelse's divestiture. turns are unclear. Take, for cumSuch a b W e cam- ple, wqubitims in indwt&~that man, wen among relatively healthy m plunged suddenly into r proOOmpBnies. &Jnged slump due to cconamrc The carpomtian that probably kms beyond their control. . probmallowed mom fmns fn the past That happened to National Steel quarter my 0thCarp., the country's thfrd largest Fortune 500 company, Beatrice steel producer, which rhoeked cvF h Co., today is .Ctively rbed- uybody in 1879 when it bought tame magazbe commented in 1973. ding those that no longer m e t rig- mous profitability targets. The Chi'Wo-bPsed mmpany. which ac- qrnredabout4a)~intb . p ~ r e n t a f c i ~ s a ~ & larn. @atimed frorn Thlrd Page Theleapfmrnme~tomortgag~~1contuarcd8Idd Olalysts, and angered legi6Iatom in W.ehington wbo IbdvotedspeclalprotectianfaoWUSM&om forem imports. The company'sjusUfication for the combination-thrt nited's earnings would help smooth out the cyclical in the steel busheas-was not really accepted by analysts. But today. even after the warat de&?&on in housing ever, those analysts grudgingly ad&t Nationah record with United Financial is not bad The subsidmy contributed $31million in pretax operatibg earnings dumg 1980 and it managed to eke out 8 *fit during the fint two quarters of this year. As a consequence, National is ealarging its pnana @ the industry. Ftecently the c4mpany acquired two of tfre biggest and sickest Lhrift institutio~in the nation, qne in Miami and one in New Yo& and merged than with United. The company's only expense in the deal L $75 million in new capital it bas promised to inve8t in the S& but it wiU receive about $10 million a month in 6ubsidieri fmm the Federal Savings & Loan hmmnce Corp. to cover locreerr on the mortgage portfolioe of the atling two for tbe next 10years. The subeidiea are an 8ldlost cettain guarantee of pmfitabiity. How will it all work out? Steel aualyst David Healy, mth Drexel Bumham LPmbert lac, cud,"Xt'a just too @ly tomalrea-" mUuEuri.0. By the same token. both RCA Colp. and Narton'SiTon Inc.. which acquired Hertz Carp. and Avis In&, respectively, saw in the rent-a-car business the source of a galloping growth rate and exploding earnings. But the troubled economy has unexpectedly pushed airlines into the severest slump ever. Because the car-rental business depends on airline passengers for the bulk of its cbstomers, both Hertz and Avis are currently a drag on earnings of their parent companies. Wall Street analysts are similarly uncertain whether United Technologies Inc. and Schlumberger Ltd. made brrlliant moves to position themselves for the futute by gquiring Bemiconductor manufacturers, or whether thtyboughtpigsinapol;e.Bothco~tsdryue 8bambhg hefty a%& from their rccurtly acquired rub* ridi9ries, United's Mostek and Schlumbezger's M h i l d NoHum8eh. Most ecovhile ia agreement t h t merge8 1-dW to mbtantial m0-ly power should k prohibited, m far believe the bushes combinations going W Y not h m m g the overall economy. Irata Throw, eCOnOmist at the Massachusetts Institute d Technology, writes: Vt Is bard to m e that today'# mergers will either help or hurt the American eoqmy . When it comes to the question, 'Will it (current merger activity) make any red diffen~lce?'the is clearly 'no.' " Thurow's c o n c l a bothas critics,who argue that it mergers don't make any ecoslomic Werence, then W y .mustbe a massive waste of resowma "I am concerned about the impact on our narily short capital." says Car Uperowitz at the CenW for Economic UtenrotmeainWaghngm, D.C. "(Tha .re) l a g c - a d a ~ ~ t S f o r l r o n p r o d u C t i r c uses, Them's not a dime's aartb qf new equipment betng bought when cmpmm . putchp#-equfp- .. ment." But other6 argue that oncc rbatehaldaa rrccivc their money for sharts wld in mager, they re-fnvest t h e funds in other aanmardn. p - i smalla md hsta growingcompanies,mdthusrecycletbowtrmdr~ into ptoductiw investments. Still others simply cmtard that companies must be h e to respond flexibly to cummtly abiftingrrraamie realities. . 'The amomk pmem b one of innovatha." a y s First Boston's Hennessy. "We have bwbesms grown by venture capital, new b h e m e s stvting up, adsting busingrowing md acqtriring othar. It'a all put af the economic prooear" Suggestions by llomt critics, therefore, that magera ovet a certain t d q shaald be prohiited by law, have gathered few adhaeatlr Oennis Mueller. the eamamisf who worked an such r study at the Intern?tioa wof ~anagementinBerlin. testified beforethe House &,committee on mtjiltmt hst year: -atbough the &&nee on mergers' effects does m t conaitw 8 for them, it also is paobobly Wt ntffiwt far 8gainst than." C M c r a & ~ ~ 1 t , ~ b e c a u e e o f & r b e p ~ m e in semicoaductorralea Armd tbea many uncertainties and problems ofanalysis, most h r v e r s have concluded that mergaa UC inkmntly neither good nor bad for companiss involved. For a variety o f reasons-@me predictable and mme mt-they appear to be good for some and bad for othas.While no consietermt readom have been isolated fa ruccess or the lack of it, most analysts point to management a# the critical difference. Robert Denison,an executive of First Security Co. in New York and an adjund Ppofedgcn at Columbia University's graduate businrchool, says, "Why do a0 many not work out? Ehcam mccedd management ie jwt m much bPtder t h amning up with goodideas." Congressional Research Service The Library of Congress C o r p o r a t e Mergers: S e l e c t e d R e f e r e n c e s , 1980-1981 These a r t i c l e s have been s e l e c t e d from j o u r n a l s t y p i c a l l y a v a i l a b l e i n a p u b l i c o r r e s e a r c h l i b r a r y . The c o n g r e s s i o n a l p u b l i c a t i o n s might s t i l l be o b t a i n e d from t h e i s s u i n g committee o r from t h e Government P r i n t i n g O f f i c e , o r t h e y may be a v a i l a b l e i n a F e d e r a l d e p o s i t o r y l i b r a r y o r o t h e r l a r g e r l i b r a r y . A h l f e l d , W i l l i a m J. Combatting t h e h o s t i l e t a k e o v e r a t t e m p t . B u s i n e s s h o r i z o n s , v. 24, May-June 1981: 70-76. The former v i c e p r e s i d e n t - p u b l i c r e l a t i o n s f o r Mead C o r p o r a t i o n t e l l s how Mead f o u g h t o f f O c c i d e n t a l P e t r o l e u m ' s h o s t i l e t a k e o v e r b i d i n 1978. American E n t e r p r i s e I n s t i t u t e f o r P u b l i c P o l i c y Research. Recent p r o p o s a l s t o r e s t r i c t conglomerate mergers. Washington, 1981. 8 4 p. ( I t s Legislative a n a l y s i s , 9 7 t h Cong., no. 25) Examines t h e p r o v i s i o n s of r e c e n t p r o p o s a l s t o restrict conglomerate mergers and c a n v a s s e s t h e r e a s o n s f o r and a g a i n s t t h e i r a d o p t i o n . B a x t e r , William. Big s h i f t i n a n t i t r u s t p o l i c y . Dun's r e v i e w , v. 1 1 8 , Aug. 1981: 38-40. Interview w i t h t h e A s s i s t a n t Attorney General f o r A n t i t r u s t regarding h i s plans t o r e d i r e c t a h t i t r u s t policy. . Conglomerate mergers: c a u s e s , consequences, and remedies. Benston, George J Washington, American E n t e r p r i s e I n s t i t u t e f o r P u b l i c P o l i c y Research [1980] (AEI s t u d i e s 270) 76 p. I S t u d i e s i n economic p o l i c y . E v a l u a t e s t h e importance of mergers i n t h e m a r k e t p l a c e f o r c o r p o r a t e a s s e t s . R e v e a l s t h a t , d e s p i t e t h e c l a i m s of c r i t i c s , t h e c u r r e n t "wave" of c o r p o r a t e mergers i s small i n r e l a t i o n both t o t h e s i z e of t h e p r e s e n t economy and t o t h e magnitude of p a s t merger a c t i v i t y . B e r t o n , Lee. The Canadians a r e coming. Dun's b u s i n e s s month, v. 1 1 8 , S e p t . 1981: 101-102, 105. D i s c u s s e s Canadian t a k e o v e r s of U .S companies. . B r i l l , Steven. Conoco: g r e a t p l a y s and e r r o r s i n t h e bar's world s e r i e s . h e r i c a n lawyer, v. 3 , Nov. 1981: 39-44, 46-52. D i s c u s s e s t h e r o l e l a w y e r s played i n t h e b a t t l e between Du P o n t , H o b i l and Seagram f o r c o n t r o l o v e r Conoco. F o r e i g n a c q u i s i t i o n i n t h e U.S.: a neomercantilist challenge. Cao, A. D. C a l i f o r n i a management review, v. 1 2 , summer 1980: 47-55. Concludes t h a t " c o n t r a r y t o t h e i n i t i a l b e l i e f and f e a r , f o r e i g n d i r e c t i n v e s t m e n t i n t h e U.S. has i n g e n e r a l proven o r d e r l y and b e n e f i c i a l t o t h e U.S. economy. Experience has shown t h a t t h e r e i s no r e a l o r p o t e n t i a l t h r e a t of c o n t r o l by f o r e i g n e r s i n any i n d u s t r i a l s e c t o r of t h e U.S. economy." Carson-Parker, John. S t o p w o r r y i n g a b o u t t h e Canadian i n v a s i o n . Fortune, v. 1 0 4 , Oct. 1 9 , 1981: 192-196, 200. Examines why Canadian energy p o l i c y and h i g h l y p u b l i c i z e d t a k e o v e r a t t e m p t = of U.S. companies by Canadian companies have r e s u l t e d i n a n t i Canadiarl f e e l i n g s i n t h e U.S. B e l i e v e s t h a t t h e s e f e e l i n g s a r e unfounded, c o n t e n d i n g t h a t " t h e i n f l o w of Canadian c a p i t a l i s a boon t o t h e U.S., n o t a burden t o be r e s i s t e d o r endured. Incoming c a p i t a l c r e a t e s demand and jobs." Change i n mood: wave of mergers s t i r s only m i l d o p p o s i t i o n , b u t b e n e f i t s a r e hazy. Wall S t r e e t j o u r n a l , J u l y 23, 1981: 1, 21. Examines why l i b e r a l c r i t i c s of l a r g e mergers have been q u i e t d u r i n g t h e l a t e s t merger wave. S e e s a s h i f t i n a t t i t u d e toward a more p e r m i s s i v e a n t i t r u s t policy. Should t a k e o v e r s be f u r t h e r r e g u l a t e d ? V i t a l s p e e c h e s , Cheney, R i c h a r d E . v. 4 7 , J u l y 1 5 , 1981: 592-595. D i s c u s s e s r e g u l a t i o n t o b e n e f i t t a r g e t company s t o c k h o l d e r s and r e g u l a t i o n i n t h e p u b l i c i n t e r e s t . Calls f o r measures t h a t would make i t easier f o r corn1 a n i e s t o grow from w i t h i n i n c l u d i n g r e p e a l of t h e d i v i d e n d t a x . Energy and a c q u i s i t i o n : h i s t o r y and p r o s p e c t s f o r a n F i - m e r g e r Crane, D a n i e l M. l e g i s l a t i o n i n t h e o i l i n d u s t r y . Harvard j o u r n a l on l e g i s l a t i o n , v. 1 8 , s p r i n g 1981: 267-326. "Mr. Crane o u t l i n e s t h e major p r o v i s i o n s of [ p r o p o s e d ] l e g i s l a t i o n and p r o v i d e s a b a s i s f o r examining t h e a n t i t r u s t and e n e r g y i m p l i c a t i o n s of r e s t r i c t i o n s on oil-company a c q u i s i t i o n . " C o t t e r i l l , Ronald W., and W i l l a r d F. M u e l l e r . The imp?ct of f i r m c o n g l o m e r a t i o n o n m a r k e t s t r u c t u r e : e v i d e n c e f o r t h e U.S. f o o d r e t a i l i n g i n d u s t r y . A n t i t r u s t b u l l e t i n , v. 2 5 , f a l l 1980: 557-582. "The f i n d i n g s of t h i s s t u d y are d i s t u r b i n g . They s t r o n g l y s u g g e s t t h a t t h e growing p r e s e n c e of l a r g e c h a i n s i n m a r k e t s t e n d s t o i n c r e a s e market c o n c e n t r a t i o n . " The a u t h o r s c a l l f o r " v i g o r o u s and i n n o v a t i v e e n f o r c e m e n t of e x i s t i n g a n t i t r u s t laws a s w e l l a s complementary programs t o s t i m u l a t e more e f f e c t i v e c o m p e t i t i o n . " ~ a k e o v e rb i d s , d e f e n s i v e t a c t i c s , E a s t e r b r o o k , Frank H., and D a n i e l R . F i s c h e l . and s h a r e h o l d e r s . B u s i n e s s l a w y e r , v. 3 6 , J u l y 1981: 1733-1750. T h i s a r t i c l e c o n s i d e r s t h e economics of t e n d e r o f f e r s , d i s c u s s e s M a r t i n L i p t o n ' s a s s e r t i o n t h a t c o r p o r a t i o n s have a r i g h t t o remain i n d e p e n d e n t and t h a t c o r p o r a t e o f f i c e r s may pur,sue t h i s o b j e c t i v e by r e s i s t i n g t e n d e r o f f e r s w i t h a l m o s t any a v a i l a b l e d e v i c e , and a n a l y z e s t h e l e g a l p r i n c i p l e s r e g a r d i n g t e n d e r o f f e r s . The a u t h o r s conclude t h a t L i p t o n ' s a d v i c e t h a t t h e board s h o u l d s e e k e x p e n s i v e i n p u t from o u t s i d e e x p e r t s i s w a s t e f u l and t h a t t h e board s h o u l d " r e l a x , n o t c o n s u l t any e x p e r t s , and l e t t h e s h a r e h o l d e r s d e c i d e . " F o g e l s o n , James H., J o a n n e R. Uenig, and B r i a n P. Friedman. Changing t h e takeo v e r game: t h e S e c u r i t i e s and Exchange Commission' s proposed amendments t o t h e Williams Act. Harvard j o u r n a l on l e g i s l a t i o n , v. 1 7 , summer 1980: 409-4b3. " I n t h e o p i n i o n of t h e a u t h o r s of t h i s A r t i c l e , t h e g e n e r a l aims of t h e Commission's l e g i s l a t i v e p r o p o s a l s a r e t o f o r c e v i r t u a l l y a l l meaningful a c q u i s i t i o n s t o be e f f e c t e d w i t h p r e - a c q u i s i t i o n n o t i c e and t o c r e a t e e x c l u s i v e [The a u t h o r s ) conclude federal jurisdiction i n the acquisition area. t h a t t h e Commission may be p r o p o s i n g a n o v e r s i m p l i f i e d and unduly r e s t r i c t i v e r e g u l a t o r y scheme i n a n a r e a t h a t i s complex and r a p i d l y changing." ... Grant, Linda, and Karen Tumulty. Some c o r p o r a t e ' m a r r i a g e s ' blossom b u t - o t h e r s w i l l end i n d i s a s t e r and divorce. Los Angeles times, Sept. 27, 1981, p a r t 6: 1-4, 16. The a u t h o r s d i s c u s s examples of s u c c e s s f u l and u n s u c c e s s f u l mergers. Hamilton, V i r g i n i a Bruce. The Business P r o t e c t i o n Act and t h e c o n t r o l of conglomerate mergers. Texas law review, v. 5 8 , Mar. 1980: 588-621. The comment a n a l y z e s S . 600 ( 9 6 t h Cong., 1st s e s s . ) and s u g g e s t s t h a t t h e b i l l does not provide a n a c c e p t a b l e s o l u t i o n t o t h e problem of conglonr e r a t e merger. L i n i n g up f e e d s t o c k s . Chemical week, v. 129, J u l y 2 9 , 1981: 26-31. Says mergers and a c q u i s i t i o n s between t h e chemical and petroleum indust r i e s such a s t h e Du Pont-Conoco merger could o b l i t e r a t e t h e l i n e between the industries. Lipton, Martin. Takeover bids i n t h e t a r g e t ' s boardroom; a n update a f t e r one year. Business lawyer, v. 36, Apr. 1981: 1017-1U28. The a r t i c l e surveys developments r e g a r d i n g c o r p o r a t e d i r e c t o r s ' a c t i o n s d u r i n g takeover bids. Meadows, Edward. Bold d e p a r t u r e s i n a n t i t r u s t . Fortune, v. 104, Oct. 5 , 1981: 160, 182, 184, 188. Examines t h e Chicago school of a n t i t r u s t p o l i c y , which s t r e s s e s t h e p r i c e s consumers pay r a t h e r than t h e number of competing c o r p o r a t e p l a y e r s . D i s c u s s e s how William Baxter, t h e A s s i s t a n t Attorney General f o r A n t i t r u s t , p l a n s t o apply t h e Chicago s c h o o l t h e o r i e s t o U S . a n t i t r u s t p o l i c y i n d e a l i n g w i t h l a r g e c o r p o r a t e mergers and conglomerate c o r p o r a t i o n s . P e t z i n g e r , Thomas, Jr. Troubled couplings: t o win a bidding war d o e s n ' t e n s u r e s u c c e s s of merged companies. Wall S t r e e t j o u r n a l , Sept. 1, 1981: 1, 19. Examines how some of t h e most promising mergers have f a i l e d t o f u l f i l l expectations. P h i l l i p s , Almarin. A i r l i n e mergers i n t h e new r e g u l a t o r y environment. U n i v e r s i t y of Pennsylvania law review, v. 129, Apr. 1981: 856-881. The a r t i c l e concludes t h a t "mergers a r e but a n e c e s s a r y phenomenon i n t h e p r o c e s s of moving from r e g u l a t i o n t o d e r e g u l a t i o n , and from a n i n e f f i c i e n t t o a n e f f i c i e n t a i r t r a n s p o r t a t i o n system." S i n g e r , James W. Big i s back i n favor-but only i f i t promotes economic e f f i ciency. N a t i o u a l j o u r n a l , v. 1 3 , Apr. 4 , 1981: 573-577. " I n a break w i t h t h e p o l i c y of t h e C a r t e r A d m i n i s t r a t i o n , t h e new a n t i t r u s t teams i n s t a l l e d a t t h e J u s t i c e Department and t h e F e d e r a l Trade Commission a r e looking more kindly on conglomerate mergers, s h a r e d monopolies and v e r t i c a l restraints. " Smith, Lee. The making of t h e megamerger. 58-62, 64. An i n s i d e view of t h e $ 7 . 6 - b i l l i o n Fortune, v. 104, Sept. 7 , 1981: Conoco takeover by Du Pont. Trebing, Michael E. The new bank-thrift competition: will it affect bank acquisition and merger analysis? Federzl Reserve Bank of St. Louis review, v. 63, Feb. 1981: 3-11. Reviews several provisions of the Depository Institutions Deregulation and Monetary Control Act (MCA) that permit more intense bank-thrift competition and describes the current approach used by banking regulatory agencies to review applications for approval of bank mergers and BHC acquisitions. U .S . Congress. House. Committee on Small Business. Conglomerate mergerstheir effects on small business and local communities; report. Washington, U .S. Govt Print. Off., 1980. 55 p. (96th Cong., 2d sess. House. Report no. 96-1447) Also issued as House document no. 96-393. . -- Subcornittee on Antitrust and Restraint of Trade Activities Affecting Small Business. Conglomerate mergers-their effects on small business and local cormnunities. Hearings, 96th Cong., 2d sess. Washington, U.S. Govt. Print. Off., 1980. 1217 p. Hearings held Jan. 31-Feb. 28, 1980. The Urge to merge-where has it come from and where is it going? Business lawyer, v. 35, Apr. 1980: 1417-1457. Proceedings of a program sponsored by the American Bar Association's Section of Corporation, Banking and Business Law. The program dealt with corporate merger activity and pending legislation to regulate it. Von Kalinowski, Julian 0.) and Kenneth W. Starr. Congress and the conglomerate merger phenomenon: the introduction of antitrust proposals to address non-antitrust concerns. Harvard journal on legislation, v. 17, spring 1980: 209-240. "In this Article, Mr. von Kalinowski and Mr. Starr argue that substantial new congressional initiative in the conglomerate merger area is unnecessary. Both authors contend that Section VII of the Clayton Act currently provides adequate protection from any direct harm to economic efficiency. They argue that passage of any bills precluding large conglomerate mergers would constitute legislative overkill." Welles, Chris. Inside the arbitrage game. Institutional investor, v. 15, Aug. 1981: 41-46, 50-51, 53, 57-58. "Corporate takeovers are at fever pitch and the arbitrageurs are betting enormous sums on their outcomes. Here's a look at how the pros play the odds, dope out the deals and why they're more than a little worried about the future of risk arbitrage." Kurt Beske Economics Bibliographer Library Services Division January 18, 19E2