(8 of 8)
But the lawsuit had an unexpected aftershock. It depressed the value of Loewen's stock. It also forced the company to issue substantial amounts of new stock, thereby diluting Ray's holdings from 20% to 15%. Both developments made the company more vulnerable to attack. On Sept. 17, SCI announced it was offering to acquire Loewen. After Loewen's board rejected the bid, SCI recast it as a hostile takeover, this time for $45 in stock for each Loewen share, for a total value that Loewen and SCI estimate to be more than $4.2 billion.
The companies have been cutthroat competitors for years. Any merger is certain to prompt antitrust concerns. Together, for example, they control more than 23% of the funeral market in Florida, considered the El Dorado of the death business. In Seattle, Loewen owns a funeral home located on the grounds of an SCI-owned cemetery. The ftc has demanded company records to try to gauge the probable effect in states where both companies have a large, overlapping presence. Loewen says nine states, including Florida, have notified the company that they plan their own antitrust reviews. And Loewen itself has filed a defensive federal lawsuit against SCI, arguing that the merger would sharply reduce competition in dozens of cities and towns from Anchorage to Brooklyn, New York. Even SCI has announced that a successful combination would doubtless require the divestiture of some properties.
That Loewen's shareholders will benefit, merger or not, is certain. The offer has bid up the value of their stock and, incidentally, of O'Keefe's settlement, which included 1.5 million shares. If SCI prevails at $45 a share, that stock will be worth $22.5 million more than was guaranteed in the settlement.
Equally certain, however, is that future bereaved won't make out so well. No one expects that a successful takeover would lead to cheaper funerals. Indeed, even Ray Loewen thinks prices would probably rise as SCI sought to cover its costs of acquisition. "They would have to get earnings someplace to justify the purchase."
But critics and independent operators agree there is more at stake than just money. With consolidation has come a level of depersonalization that family-owned funeral homes, for all their other alleged sins, have managed to resist. "It really shows that nothing is sacred," says Karen Leonard, executive director of California's Redwood Funeral Society (her E-mail name is CheapExit), who was Mitford's research associate. "You are just part of the machine. This is just another body. This is just another family. Sell, sell, sell."