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Fluor Corp. paid $2.7 billion to acquire St. Joe Minerals. The Kennecott copper company fought off a takeover attempt by Curtiss-Wright Corp. this year, only to be swallowed by Standard Oil Co. of Ohio. The oil companies are both the hunters, because their coffers are overflowing with petroprofits, and the hunted, because of the value of their deposits still in the ground.
Moreover, inflation in construction costs has encouraged companies to buy existing factories rather than build them and acquire mines rather than dig their own. Concludes Tomislava Simic, an expert on merger patterns for Chicago's W.T.
Grimm & Co.: "Companies don't want to take the risk of establishing new ventures. They want to acquire those with an already profitable track record."
The merger binge has been a bonanza for a special breed of Wall Street investment banker who negotiates the megabuck deals. Acquisition teams at First Boston Corp., which handled Du Font's bid for Conoco, and Morgan Stanley, which advised the oil company, are expected to earn almost $15 million each from the merger.
Some economists fear, however, that what is good for the Wall Street merger makers is bad for the health of the economy. Says Walter Adams, professor of economics at Michigan State University:
"Merger managers are playing short-term games that will not create a single new job, build a single new factory or add anything to U.S. technology. The economy is likely to be hurt by merger activity that is senseless and in fact creates Brobdingnagian corporate monsters with no need to compete or push hard."
Other experts, like Yale Law Professor Robert Bork, disagree strongly. Says Bork: "When I see business managers deciding to merge, and I can see that it doesn't eliminate competition, then the only thing it does do is increase business efficiency. Anything that increases business efficiency helps—at home and in foreign markets."
The Reagan Administration agrees with Bork. In fact, Bork's writings are required reading for incoming Justice Department antitrust attorneys.
Argues Attorney General Smith: "Efficient firms should not be hobbled under the guise of antitrust enforcement." His antitrust chief, William Baxter, last week acknowledged that the Administration was creating "in many senses a more favorable atmosphere for mergers."
Since Baxter assumed his post in March, his trustbusters have filed only four new suits, compared with the 25 started during the same period in the Carter Administration. Baxter last week dropped two of the antitrust cases inherited from Carter: one against Mack Trucks and the other involving two firms in the brick-selling business. In light of the new attitude, Government approval of the Du Pont-Conoco match-up appears almost certain.
The limits of this big-is-beautiful philosophy may be severely tested in the coming months. No sooner had Du Pont and Conoco exchanged vows than Wall Street was abuzz with speculation about the next multibillion-dollar corporate link. The best bet is a union between Texaco and Cities Service.
And what about Edgar Bronfman?