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Sound and Fury


By Paul A. Engelmayer

PITY POOR William M. Agee. The brash, 44-year-old chairman of Bendix Corp. thought he had wrapped up one of the biggest business deals of all time last month when Bendix made a hefty $1.5 billion bid for the promising Martin Marietta Corp. But Marietta fought the unfriendly bid, other industrial giants stepped into the fray, and in the end the tables were turned on Agee A third company, Allied Corp., bought Bendix last Friday, turning Agee from conqueror to conquered in the space of a month.

America has become inured to colossal business mergers in the last two years. Weddings like those of Occidental Petroleum and Cities Service, United States Steel and Marathon Oil, and the record-setting $7.5 billion union of Du Pont and Conoco have sometimes been shotgun affairs, sometimes harmonious ones. Throughout, the national press has doled out coverage indiscriminately in its continual search for bigness.

Unfortunately, the cover-story focus on "Merger Mania" has long obscured the fact that few such pairings are even remotely friendly partnerships. More often, they are one-sided takeovers by well-heeled companies determined to expand. Even when a company is saved from unwanted takeover by the intervention of a more desirable "white knight" purchaser, results aren't necessarily cheery. Employees of Conoco now say that life under Du Pont is far from fun, citing in particular the chemical giant's nasty job shake-ups and layoffs, and its sudden imposition of inconsiderate work rules.

The bloody Bendix-Marietta saga should dispel any sanguine impressions. The two giants slugged it out toe-to-toe for 31 days, and the well-publicized battle, "at various times...threatened to destroy Marietta or Bendix, or both," according to The New York Times. At one point in late August, it looked like each would succeed only in buying each other's shares, a kind of corporate analog to the mutually fatal duel of Hamlet and Laertes. The two companies--and a pair of other preying conglomerates--spent millions of dollars on legal and financial fees, while diverting the financial community's attention and credit for a month and discombobulating the stock market.

In the end, the intervention of Allied Corp. did disentangle the mess a bit, but for Bendix and Marietta the end of the match marked a pyrrhic victory at best. Agee's Bendix had become somebody else's property, and Marietta had lost a month's time and resources while surrendering much of its stock to third parties. The only winners, it seems, were the speculators fortunate enough to have their transactions fall on the right side of the two companies' stock caprices.

Just why mega-companies like Bendix insist on embarking on such excursions of sound and fury that, of course, signify nothing comprises a small mystery. Clearly, diminished federal regulation plays a part. Yet in the case of Bendix, Agee must have known that his gamble would meet with strong resistance--from Marietta.

The other reasons usually proffered for takeovers don't wash here. Marietta wasn't yearning to be rescued from collapse--far from it. A Bendix-Marietta pairing apparently wouldn't have made for "stronger competition" or yielded "substantial economic efficiencies," as the skeptical Times observed. If anything, last month's corporate jockeying and the diverting effect it had on the stock market and the companies involved was downright inefficient.

In the wake of last week's denouement, daily newspapers across the country editorialized that Bendix's shakedown cruise pointed up the need for stricter federal regulation. Undoubtedly true, but the recommendation is unrealistic in the Age of Reagan. More practically, the unseemly Bendix affair should provoke a little reassessment on the part of American industry, a realization that "mass merger" is equivalent to corporate suicide Last month's theatrics show that today's mergers often have nothing to do with efficiency and productivity. They stem, instead, from a sense of institutional machismo that craves acquisition. America's business giants have yet to learn that their corporate masturbation, while fleetingly exciting, can only leave themselves--and the U.S. economy--exhausted and unsatisfied.

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