Financial Firms Lead Way as Merger Activity Rises

By White, Michael | THE JOURNAL RECORD, September 15, 1997 | Go to article overview

Financial Firms Lead Way as Merger Activity Rises


White, Michael, THE JOURNAL RECORD


LOS ANGELES -- As a survivor of two corporate buyouts, Rich Stiller has some simple advice for others who may find themselves staring into the jaws of acquisition.

"Have money in the bank ... and you can always have the choice of walking away," Stiller said. "They key thing is, don't listen to what the company says because they're going to say what they need to make the deal successful."

If Stiller's philosophy sounds a bit paranoid, it's understandable. Merger activity among publicly traded U.S. companies rose 39 percent increase in the first half of 1997 with 3,461 deals announced, according to Mergerstat, a division of investment bank Houlihan Lokey Howard & Zukin. The aggregate value of the deals was $282.4 billion. Securities Data, which tracks public and private companies, puts the number of deals at 4,723. The figure marks a 10 percent drop in volume, but represents a record value of $366.6 billion. Five of the six biggest deals in dollars and cents involved financial services companies, led by software supplier CUC International Inc.'s $10.9 billion bid for HFS, an investment brokerage. California was the most active state, with 432 companies on the buyer side and 477 selling. The trend isn't limited to the United States. Japan's Fair Trade Commission reported in June that it approved a record 1,476 mergers during fiscal 1996. "Right now, the belief is consolidation is good as long as you don't become a conglomerate, as long as you stay focused in your core competencies," said Scott Adelson, managing director of Houlihan Lokey. That was the object of the $15 billion merger of Boeing and McDonnell Douglas that took effect in August. The deal strengthens Boeing's position as the leading maker of commercial aircraft, and boosts its defense business. The merger was viewed as a godsend to many employees of Douglas Aircraft, McDonnell Douglas' commercial aircraft division. Douglas' sales have slipped drastically. Boeing, by contrast, is selling so many planes it can't keep up with orders. "Douglas had an uncertain future, but with this opportunity now, it's very solid," said Dave Conlon, an operations analyst for Douglas. "There's certainly hope that we will maintain the current employment base." But consolidation isn't always good for employees. According to the placement company Challenger, Gray & Christmas, nearly 30 percent of the 21,004 job cuts announced by corporations in May were the result of mergers. …

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