Word: mergers
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...doubt that his company was poised to pounce. Said he: "We know Conoco and the business it operates. Conoco is a great company with fine resources and excellent management and personnel." Surprisingly, Warner's message shrugged off possible Government objections, saying, "Preliminary studies indicate that a Mobil-Conoco merger would not create difficulties under existing antitrust guidelines...
Many of the coveted companies moved swiftly last week to protect themselves from a takeover. Cities Service has lined up $1 billion in standby credit, possibly to enable it to buy back a chunk of its own stock in the event of an unwanted merger bid. Marathon Oil has arranged to borrow up to $5 billion. Analysts think that Marathon might be preparing to buy another company and thus become too big to be easily swallowed. Even Gulf, the fifth largest U.S. oil company, announced a plan last week to protect itself by buying up 5% of its own stock...
Attractive companies have felt ever more vulnerable since President Reagan took office. When the new Attorney General, William French Smith, asserted that "bigness is not necessarily badness," merger makers saw his words as a green light to corporate takeovers. If the present torrid pace of acquisitions continues, U.S. companies could spend $70 billion this year to absorb more than 2,000 other firms. Says Robert Lekachman, professor of economics at New York's Lehman College: "The Reagan Administration has unleashed the wildest collection of mergers and takeover events since Napoleon conquered most of Europe...
...merger binge has brought protests from several prominent Democrats on Capitol Hill, including Senators Edward Kennedy and Howard Metzenbaum. Says Metzenbaum: "If Mr. Reagan wants to eliminate the antitrust laws, he ought to come up here with legislation, not skulk around accomplishing the same thing through inaction." Republican Senator Strom Thurmond promised last week that his Judiciary Committee would hold hearings on the Conoco question...
...many Washington antitrust experts, including some within the Justice Department, predict that the Government will ultimately approve a merger between Conoco and one of its suitors-even Mobil or Texaco. They point out that contrary to conventional wisdom, the oil industry is highly competitive. Under present antitrust guidelines, the Government considers an industry to be exceedingly concentrated if four or fewer firms control 75% of the market. In the oil business, the top four companies account for less than 20% of sales. By contrast, four auto firms control 70% of the market, while four steel companies have 44% of that...