Letters: Jan. 13, 1986

• Share

Merger Wave

To the Editors: You did a public service by publishing the story on merger madness [ECONOMY & BUSINESS, Dec. 23]. There is nothing inherently wrong with mergers. Our corporation has often taken a stroll down acquisition avenue. But when we take over a company, we do it because we want to run it. People who issue junk bonds are different, as Felix Rohatyn points out. They are not interested in companies as institutions, but want to break up the business they are after. Takeovers using junk bonds rob stockholders of the value of their investment, throw employees out of work and make the American economy less competitive with the rest of the world. Nothing less than federal legislation is needed to stop this abuse. Raymond D'Argenio Senior Vice President, Communications United Technologies Corp. Hartford

Your article says "takeover strategy is taking up vast amounts of management's energy and attention." Of course. But would these corporate chiefs have had to fight for their jobs and perks if they had been building the balance sheets for the benefit of stockholders instead of concentrating on short-term operating statements for their own benefit? Earl D. Brodie San Francisco

You ask, "Is the current rush of mergers good for American business? For stockholders? For the country?" You should also have questioned their impact on the work force. Research conducted by Philip Mirvis of Boston University and me shows that even "friendly" mergers and acquisitions are extremely stressful for employees. Top managers and key performers fear that the careers they have developed will matter little when a new owner takes over. Worst-case rumors run rampant, and the most talented staffers spend their work hours lining up interviews with other firms. It is not surprising that this decreased morale and productivity contribute to the finding that half of all mergers yield disappointing financial results. Fortunately, firms can take steps to minimize the human costs of acquisition through comprehensive human-resources planning, effective communication programs and carefully chosen techniques to facilitate a smooth postmerger integration. Mitchell Lee Marks Los Angeles

What astonishes me is that Ted Turner and Boone Pickens and their ilk got free rein to pursue their nonproductive activities, while the antitrust zealots hounded American Telephone & Telegraph and broke up the best telephone system in the world. Emily Exner Chi Chapel Hill, N.C.

Deficit Cure

The Gramm-Rudman Balanced Budget and Emergency Deficit Reduction Control Act is the best thing to happen in America since the Democrats started spending their way into office [NATION, Dec. 23]. There is no sane alternative. The country was headed for total bankruptcy. In five years, when the budget is balanced, the free-enterprise machine will take off like a rocket. James A. Worrell Oklahoma City

On the grounds of conflict of interest, all legislators should be disqualified from submitting or voting on money-spending plans that primarily affect their home districts. Huge amounts of money could be saved by eliminating the many wasteful projects that are put forth solely to enhance a lawmaker's image at home. Issues could then be settled on their merit rather than for re-election purposes. Neal Rohrer Kingsburg, Calif.