NEW YORK -- Cars, houses, appliances, you name it, even gasoline, haven't been selling too well during these depressed economic times. But entire companies have been selling like hot cakes.
The revolving-door business Wall Street investment bankers have been doing in arranging corporate marriages has made even Las Vegas wedding chapels jealous.
The more than 2,000 corporate weddings held in 1981 were some of the most spectacular and lavish in corporate history, pairing such giants of corporate America as:
Du Pont-Conoco, General Foods-Oscar Mayer, MGM-United Artists, Fluor-St. Joe Minerals, Occidental Petroleum-Iowa Beef Processors, Nabisco-Standard Brands, Standard Oil of Ohio-Kennecott, Prudential-Bache, and a couple thousand others.
There are no signs of the merger wave waning in 1982.
'We've seen an uptrend for quite a few months now, and there doesn't seem to be any sign of it running out of steam,' says Dennis Williams, president of W.T. Grimm & Co., a Chicago-based merger specialist.
A good deal of the upsurge in activity has been attributed to what appeared to be a more accommodative attitude imported to Washington by the new administration.
'There was the perception the Reagan administration would be easier, and so companies started things they wouldn't have tried under previous administrations,' said Williams.
The more lenient philosophy was broadly articulated by Attorney General William French Smith who proclaimed in a speech to a group of lawyers: 'We must recognize that bigness in business does not necessarily mean badness.'
While the rhetoric has consistently stated that size alone was not a sufficient reason to challenge a merger, Smith's statement did not signal a carte-blanche policy on mergers.
Both in action and public pronouncements, proposed mergers between major competitors have not been sanctioned.
The government filed an antitrust suit to block both LTV's takeover attempt of rival aerospace contractor Grumman Corp. and the proposed beer industry takeover of Schlitz by G. Heileman Brewing Co.
The Federal Trade Commission also recently filed suit to block Mobil from acquiring industry competitor Marathon Oil Co.
A clear definition of the administration's stance, however, remains to be spelled out. Antitrust Chief William Baxter has said the antitrust guidelines drawn up in 1968 are too restrictive. But until the guideline revisions are completed in 1982, how accommodating the new administration will be to mergers between competitors will remain unclear.
A significant change in antitrust procedure, however, may have surfaced when the FTC, in filing the suit against Mobil, gave what one Congressman critcally labeled a 'blueprint' to Mobil, spelling out the terms under which a takeover of Marathon might be acceptable.
Another driving force behind the merger binge was the continuing stock market slump. For many companies eyeing expansion, it didn't take too many computations on the pocket calculator to determine that it was often far more expensive to build new factories from the ground up or explore for natural resources than it was to buy a complete company - lock, stock and barrel of oil -- right off the New York Stock Exchange shelf.
Compared to the time, the risk and the cost of building new plants and operations from scratch -- even with the new tax incentives for capital investment -- acquiring another company off the rack on Wall Street can often prove dirt cheap.
Take, for example, the oil industry. Wildcatters may drill 10, 20, 30 or more dry holes before they go bankrupt or find one with enough oil to exploit commercially.
But on the stock exchange floor, the prospecting can turn a gusher each time out and at a fraction of the price. There's no need to prospect in the far corners of the world, no need to spend millions on dry holes, and no need to wait. Buy a company by making its stockholders an attractive offer and you have proven oil reserves in the ground today.
As John K. McKinley, chairman of Texaco Inc. -- which had made an early bid to buy Conoco Inc. -- has acknowedged: 'We are cognizant that there is a price at which the purchase of known reserves in the ground is preferable to the risk of exploration.'
According to Tomi Simic, W.T. Grimm's director of research, final figures for 1981 are expected to show between 2,200 and 2,300 mergers and acquisitions, up substantially from the 1,889 recorded in 1980, but about on a par with 1979's level.
The dollar values are expected to be record-shattering. During the first nine months of 1981 alone, merger activity totaled $60.8 billlion, compared to $44.3 billion during all of 1980, the previous record.
Those figures reflect the growth of gargantuan deals that have dazzled even the hard-to-dazzle pinstriped professionals on Wall Street.
During the first nine months of 1981 there were 94 merger deals which exceeded $100 million -- the same number as took place during all of 1980. In 1975, by comparison, there were only 14 deals of such magnitude.
The biggest in 1981 was the takeover of Conoco, which also became the biggest corporate takeover in U.S. history. In a three-way billion-dollar bidding war for control of the nation's ninth largest oil company, chemical-giant Du Pont Co. beat out Mobil Oil and Canada's Seagram liquor empire with a bid of $7.5 billion.
The urge to merge has been more than a dazzling spectacle on Wall Street.
The merger blitz has changed the complexion of entire industries. Three major acquisitions of brokerage houses -- the Bache Group by Prudential Insurance; Shearson Loeb Rhoades by American Express, and Dean Witter Reynolds by Sears Roebuck -- may have set the stage for a dramatic industry revolution with prospects of giant financial supermarkets where individuals could shop for everything from stocks to insurance to credit.
The prospect of further deregulation of the financial services business triggered other merger deals and likely will inspire many more in 1982. As a means of positioning themselves for the inevitable day that interstate banking becomes legal, large banks signed preliminary acquisition agreements with other banks across the country.
Mergers also proved a means of rescuing failing thrift institutions, which otherwise would have been forced to close their doors and leave heavy insurance claim burdens for federal agencies.
But the merging of America has caused growing furor on Capitol Hill.
Just before Congress adjourned for the year, the House passed a bill ordering a six-month moratorium on large oil company mergers. The measure faces a test in the Senate sometime after the next session convenes on Jan. 25.
The House action developed from the controversy surrounding the sizzling bidding war between Mobil and U.S. Steel for Marathon Oil.
Mobil's attempt to gain control was greeted by public demonstrations in Findlay, Ohio where residents feared Marathon's headquarters and jobs in Findlay would vanish in a Mobil takeover.
In Washington, the concern was over competitor buying competitor, especially in the oil industry. But many were not exactly thrilled with U.S. Steel's bid either.
Rep. Clarence Brown, R-Ohio, the leading GOP energy legislator, contended 'U.S. Steel might better have used its money investing in steel mills.'
Rep Tom Lantos, D-Cal, complained that Congress apparently accepted 'a Trojan horse' when it approved generous corporate tax depreciations and oil decontrol in hopes that basic industries would grow more competitive and energy firms would search for new oil reserves. The Marathon takeover contest shows such gestures are being abused, he charged.
Concern also mounted over the rash of foreign takeovers. Earlier in the year, Canadians, spurred by a new energy policy for the provinces, went on a buying spree for American oil properties on both sides of the border and sent some U.S. congressman to the legislative drawing boards to try to find ways to thwart the trend.
Though the 186 foreign takeovers of American companies during the first nine months of 1981 was only slightly higher than for the same period in 1979, many of the 1981 variety have been mammoth. The recent acquisition of Santa Fe International by the Kuwait Petroleum Corp., an agency of the Kuwaiti government, ran $2.5 billion.
But behind the merger figures is a large portion of transactions involving companies who previously did some acquisitions of their own and then decided to sell them off. According to Grimm's figures, 34 percent of the merger transactions have involved divestitures.
Not all the buying action took place on the floor of the stock exchanges either. Some 56 percent of the acquisitions were of private companies. Publicly traded companies -- which caused most of the year's hoopla -- accounted for only 7 percent of the action.
