| Show THE VOICE OF BUSINESS The ABCs of mergers By Richard L Lecher Lesher Pres Chamber of Commerce of the United States The medias media's portrayal of the corporate takeover effort Involving Bendix Martin Marietta and what seemed like a cast of thousands left many Americans with the Impression that they had witnessed a grownup grown version of playground bullies fighting over each others other's marbles Theres There's no question that the per per- personalities personalities of willed strong executives do playa play a role In this kind of high stakes cor cor- corporate maneuvering Yet unfortunate unfortunate- unfortunately ly the broader Issues Involving the reasons why some companies try to take take takeover over others have been o obscured s I ij it suspect that most ost Americans ns believe that that that bad they reduce competition and Increase the concentration tion of power over prices and wages In Inthe inthe the hands of a few Even many conser- conser conservative conservative pro business politicians feel much much more comfortable talking about business concerns and Issues when they are talking about small businesses On the whole these Impressions are unfounded particularly with basic an an- an antitrust provisions on the books In many cases mergers make good economic i i sense for all of us The fact that a company is doing well enough that It wants to expand is a good sign for the company and our economy not a bad one In many Instances this ex- ex expansion ex- ex can best be carried out by pur- pur purchasing purchasing chasing an existing operation ra rather ther than starting starling a new one The plant equip ment management workers and market are already In place Moreover the shareholders of the firm being acquired often do quite well for themselves They receive a price for their stock that Is often considerably higher than the current market level Stockholders In the acquiring company stand to benefit as well If the manage manage- management ment has made the right decision Any well run company worth orth Investing InIs in is constantly looking for growth for opportunities new niches In the economy that can enhance Its overall profit picture Beyond the stockholders the American people stand to benefit In to- to today's today's days day's world economy Americans are be- be beIng being Ing Increasingly challenged by the sanctioned government monopolies of our fiercest foreign competitors We need companies that can compete on this global scale that can afford to Invest technology and have the resources to market and distribute their products to every corner of the world Mergers often allow our industries to pool their resources to take advantage of the economies of scale and produce better products faster at competitive prices University of Chicago Professor Yale Brozen has studied this question In great detail and concluded recently Mergers make the market more competitive They do so primarily by Improving effi In the use of our capital and labor The improved efficiency Increases total output which reduces prices and ex- ex expands ex- ex panda trade And I might add protects and Increases the number of jobs Safeguards against unfair and monopolistic business practices are necessary but It Is time we moved away from our medieval superstitions about big companies The global realities of the require an American economy In which both large conglomerates and small creative entrepreneurs play critical roles In regaining our leadership edge against all foreign competitors And If were we're In this game to win then we must allow the marketplace to sort out those economic needs that can best be met by big businesses from those that are best met by smaller businesses If we wedo wedo do there will be plenty of marbles for forY forto Y to everybody |
