Du Pont springs a surprise $7 billion offer for resource-rich Conoco
While most Americans were enjoying fun and fireworks on the Fourth of July weekend, teams of executives from Conoco Inc. and Du Pont and Co. had forsaken friends and family to work almost round the clock on the biggest merger in U.S. corporate history. Du Pont, the largest U.S. producer of chemicals, had secretly offered to buy Conoco, the ninth biggest American oil company. After five hectic days of staff work, the deal seemed set. On Sunday night of the July Fourth weekend, Du Pont Chairman Edward Jefferson flew from his headquarters in Wilmington, Del., aboard a King Air twin-engine turboprop to Stamford, Conn., for a midnight meeting with Conoco Chairman Ralph Bailey in that company's boardroom rotunda. Just after 1 a.m. the two weary, rumpled chief executives settled final details, sealed the agreement with a handshake and retired to Bailey's office for a round of Scotch and bourbon. Du Pont was paying some $7 billion in cash and stock for Conoco. The union could form the seventh largest industrial enterprise in the U.S., ranking just behind the Ford Motor Co.
That marriage, however, is not totally certain. The deal still has to be accepted by stockholders of both Du Pont and Conoco. For two months a flock of suitors had fought over Conoco in a bidding battle as frenzied as an auction for a newly discovered Rembrandt. The other most serious contenders: cash-laden Seagram Co. of Canada, the world's largest liquor distiller, and Texaco, the third biggest U.S. oil firm.
The fierce competition for Conoco is only the latest manifestation of the merger mania that is sweeping the U.S. This year alone, seven deals each worth $2 billion or more have been started or completed. Like baseball club owners plucking off free agents, corporate captains are choosing up sides in a wild scramble that could bring significant shifts in the balance of power throughout U.S. industry. The Reagan Administration seems to be encouraging the merger makers, and Attorney General William French Smith proclaims, "Bigness does not necessarily mean badness."
The Conoco-Du Pont agreement was the climax of a complex drama of high finance. It began with unwelcome assaults on Conoco by two Canadian companies. The first came in May, when Dome Petroleum bought 20% of Conoco's stock. The U.S. company fended off that threat by agreeing to trade its majority interest in the Hudson's Bay Oil and Gas Co. in return for the Conoco stock that Dome had acquired. At the same time, however, a more ominous Canadian challenger appeared. In late May, Seagram privately approached Conoco with an offer to buy 35% of the oil firm's shares. Edgar Bronfman, Seagram's adroit chairman, is currently on the hunt for new acquisitions with nearly $3 billion, gained largely from the sale of Texas oil and gas properties.