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...past four years GE has been selling off unprofitable operations and accumulating cash that could be used for a major acquisition. Last spring, when CBS was facing an unwanted takeover bid from Ted Turner, GE offered to come to the rescue with a higher price if the company wanted a merger. After CBS fought off Turner, GE turned its attention to RCA, which also feared a hostile takeover bid. Perhaps to make itself less vulnerable, RCA had discussed a possible friendly merger with MCA, a movie and television conglomerate, but the talks broke...
...first step in GE's courtship of RCA came about two months ago, Welch says, in an early-morning telephone call he made to Felix Rohatyn, a partner in the Lazard Freres investment banking firm and one of Wall Street's leading merger specialists (see following story). "Can you arrange for me to meet Brad?" asked Welch. The Brad in question was RCA Chairman Thornton Bradshaw, 68, who is a friend of Rohatyn's. In early November Rohatyn invited the two men to have a drink in his New York City apartment. They talked about the defense business...
After carefully studying RCA's public financial records, GE two weeks ago made an offer. RCA held out for more money, and negotiations started. The two sides settled last Wednesday on $66.50 a share, for a total of $6.28 billion...
Though the proposed merger must be approved by federal regulators, Welch doubts that antitrust considerations will be an obstacle. He points out that Japanese and Korean manufacturers have made consumer electronics an extremely competitive business and argues that a combined GE and RCA could help reduce the flow of imports. Says he: "Maybe two American manufacturers together can beat the competition...
...employees are naturally apprehensive about what GE may do to their company. Much of the headquarters staff is likely to be redundant after the merger. When RCA tried to get job guarantees for its management during the negotiations, Welch refused...