Word: mergers
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Within 24 hours Bailey was on the phone to Jefferson. "Now you can help," said Bailey. The merger talks moved swiftly, in part because Bailey, 57, the burly son of an Indiana coal miner, and Jefferson, 59, a London-born intellectual with a Ph.D. in chemistry, knew each other well. They had worked together on joint gas-exploration ventures that Du Pont and Conoco had begun three years ago in Texas. Jefferson flew to Stamford four times in the next eight days. All along, he assured Bailey that Conoco's management would not be changed...
Suddenly, in the midst of discussions between Du Pont and Conoco, another competitor appeared. Texaco made an offer for Conoco that was roughly comparable to Du Font's bid. But Bailey preferred to stick with Du Pont. He feared that even the Reagan Administration would balk at a merger between the two huge oil companies: a Texaco-Conoco combination would be larger than any U.S. energy firm except Exxon...
Wall Street was also shocked because Jefferson had been chief executive of Du Pont for only two months, since the retirement as chairman of the highly respected Irving Shapiro. After the merger announcement, Jefferson admitted that he had been forced "to make a very quick assessment of whether it was worth throwing our hat into the ring." In fact, one of the first steps Jefferson took in assessing the merger was to call Shapiro for advice. Recalls Jefferson: "We thought about it and concluded that in a merger with Conoco we would be stronger than as Du Pont alone...
...Font's surprise foray shows that few companies or industries are immune to merger fever. As a result, the ranking of top U.S. firms has become almost as volatile as Billboard magazine's Hot 100 pop record chart. The strategies behind the mergers are as varied as the deals themselves. American Express, for example, grabbed the Shearson Loeb Rhoades brokerage house on its way to becoming a one-stop financial service center. To enhance its power on grocery shelves, Nabisco merged with Standard Brands...
Moreover, inflation in construction costs has encouraged companies to buy existing factories rather than build them and acquire mines rather than dig their own. Concludes Tomislava Simic, an expert on merger patterns for Chicago...