Come Together, Right Now

Greed! Aggression! Corporate Intrigue! Betrayal! That's what you get when, say, a home-shopping channel wants to merge with a television network, right? Yet the juicy story line that usually comes with takeovers among media moguls is showing up in all corners of American industry these days. In fact, while the buzz is with Ted (Turner) and Larry (Tisch), the guys who are throwing real money around in their bids to consolidate belong to such unglitzy businesses as railroads and banks. Now it can be said: the '90s were never meant to be the decade of small appetites.

Just last week, American Home Products, a sprawling outfit whose wares range from Anacin to Chef Boyardee spaghetti and meatballs, launched an $8.5 billion hostile bid for pharmaceutical maker American Cyanamid. At $95 a share, the offer was fully $32 a share more than Cyanamid's recent trading price, which made its shareholders the envy of Wall Street. Moreover, the staggering bid arrived while investors were still humming with reports that the Norfolk Southern railroad was in talks to acquire Conrail, once a sickly ward of the government but now a healthy freight hauler, in a deal that would create the second largest U.S. rail carrier.

The prospect of such industrial-strength combinations was only part of the merger action. In Washington the House overwhelmingly agreed to let banks open branches across state lines and sent the bill on to the Senate, where it is expected to pass within the next two weeks. The House vote overjoyed giants such as Citicorp and BankAmerica, which would finally be free to gobble up banks across the country.

The pace of takeovers today already rivals the most frantic years of the '80s. So far in 1994, companies have announced deals worth $171.6 billion, nearly 50% more than those of a year ago. At that rate, 1994 would trail only 1989 as the most merger-filled period on record. "The deals have just begun," declares Martin Sikora, editor of the trade journal Mergers & Acquisitions. "The story of entire industries is being rewritten."

The corporate marriages range across the breadth and depth of American business, from banking to pharmaceuticals to telecommunications. Defense? Try Northrop's $2.1 billion buyout in April of aircraft maker Grumman, which had also been sought by Martin Marietta. Retailing? Federated paid $4.1 billion for R.H. Macy last month in a merger that created America's largest department-store company. Wireless phones? U.S. West and AirTouch Communications agreed two weeks ago to pool their cellular operations into a business with total sales of $13.5 billion and nearly 2 million subscribers.

The action is hardly confined to corporate behemoths. Merger mania has been raging just as strongly among smaller firms such as management consultants, environmental engineers and even funeral homes. The dealmaking is particularly feverish among medium-size makers of components like auto parts. "Throughout all of U.S. industry, and particularly in the automotive sector, the trend is clearly toward reducing the number of suppliers you want to do business with," says Robert Eaton, Chrysler's chairman and CEO. So suppliers are rushing to team up with one another and thus increase their chances of remaining in business.