Mergers: From Food to Films

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"I suppose," says Nathan Cummings, "that there isn't a week that goes by that I don't look at somebody's business." Cummings, who will turn 70 this fall, is a Canada-born, Chicago-based connoisseur of fine art and fine companies. His Consolidated Foods Corp. (TIME, June 24) has made corporate acquisitions and become a food-industry behemoth, with sales last fiscal year of $830 million. Last week Cummings announced the result of his latest look into somebody else's business. Consolidated agreed on a merger in which, for $140 million in stock, it will acquire United Artists Corp.

Long Step. For Cummings and Consolidated, taking over the best money-maker in the motion-picture industry ($12.8 million earnings last year on revenues of $193.7 million) is a long step. Until this year, Consolidated limited its acquisitions to the food-processing business. The United Artists merger will not only put Consolidated over the billion-dollar sales mark this year but take Cummings into nonfood fields with vast possibilities. "We believe," said Cummings, that "the merger with United Artists is the most important diversification made by our company since its founding 27 years ago."

The merger is important for United Artists too. Chairman Robert S. Benjamin and President Arthur B. Krim, who form a kind of Alphonse-and-Gaston partnership, in 15 years have sponsored one of the most remarkable comebacks in show business. Organized in 1919 by Mary Pickford, Douglas Fairbanks Sr., Charlie Chaplin and D. W. Griffith, United was losing $100,000 a week by 1951. Lawyers Benjamin and Krim (law partners of Louis Nizer) took over, encouraged talented independent producers to make good films for United to bankroll and distribute. The list has since included such successes as Marty, High Noon, The African Queen, West Side Story, Tom Jones, and lately The Russians Are Coming and Khartoum. United backed two Beatle pictures, has made $10 million on them. On four James Bond films, its $13 million investment has so far returned $124 million.

Opportunity Broadens. Wall Street is leary of the movie industry because it so often soars and dips on hit movies or bombs. In spite of success, United's price-earnings ratio has stayed low, and its opportunity to grow has been hampered. Now, with financial backing from stronger Consolidated, it will be able to explore such fields as television, books, magazines and music publishing. Under the Cummings system of decentralized management, moreover, United's old team will continue to run the motion-picture business. All Cummings will have to do, he hopes, is count the earnings and perhaps look at a movie once in a while.