Megamergers: Corporate America's Billion-Dollar Takeovers by Kenneth M. Davidson

Megamergers: Corporate America's Billion-Dollar Takeovers
By Kenneth M. Davidson
2003/07 - Beard Books
1587981866 - Paperback - Reprint - 427 pp.

Comprehensive, revealing, and compelling, Megamergers is an important guide for general business readers looking for a broad understanding of mergers and their consequences.

Publisher Comments

Categories: Banking & Finance

This title is part of the Business Histories list.

Of Interest:

A Not-So-Tender Offer: An Insider's Look at Mergers and Their Consequences

Dangerous Pursuits: Mergers and Acquisitions in the Age of Wall Street

Leveraged Management Buyouts

Macy's for Sale

Managing the Merger: Making It Work

Merger: The Exclusive Inside Story of the Bendix-Martin Marietta Takeover War

Mergers and Acquisitions: Issues from the Mid-Century Merger Wave

Takeover: The New Wall Street Warriors: The Men, the Money, the Impact

The Corporate Merger

The General Mills/Parker Brothers Merger: Playing by Different Rules

The Human Side of Mergers and Acquisitions: Managing Collisions Between People, Cultures, and Organizations

The ITT Wars: An Insider's View of Hostile Takeovers

The Liquidation/Merger Alternative

The Titans of Takeover

Transnational Mergers and Acquisitions in the United States

Welcome to Our Conglomerate -- You're Fired!

Megamergers portrays the players, the strategies, the laws, and the consequences of the largest merger wave in the history of the business world. In the 70s and 80s, billion-dollar takeovers by giant oil, tobacco, automobile, steel, and financial firms rocked the business community. With keen analytic insight, Kenneth M. Davidson details the economic, personal, and sociological conditions that contributed to the favorable takeover environment and shows why laws did not forbid large takeovers and why they might in the future. He describes why they happen, how they are done, and what takeovers mean to government and business.

From the back cover blurb:

... It gives everyone concerned with mergers a solid understanding of what to do and what the political and economic consequences of megamergers are for our social system. Most importantly, it suggests policies for encouraging real economic growth and for preventing future havoc in the business arena.

From Turnarounds and Workouts:
Review by Henry Berry

Megamergers are nothing new to the business world. One of the first occurred in 1901, when Carnegie Steel merged with several rival steel corporations, resulting in the billion-dollar United States Steel. Since then, megamergers have been a part of American business. However, the author notes that megamergers have historically “occurred sporadically and been understandable” on face value. By contrast, in recent decades there has been a “current wave of large mergers [that] is unprecedented.” 

In Megamergers – Corporate America’s Billion-Dollar Takeovers, Davidson looks at the unprecedented number of megamergers occurring today and considers whether this signals a change in the thinking of U.S. business leaders. Legislators, corporate executives, mergers specialists, and anyone else involved in, or affected by, megamergers will find this book enlightening. 

An announcement of a merger is usually accompanied with the pronouncements that it will result in greater synergies, operational efficiencies, and improved servicing of markets. Davidson questions whether this has, in fact, been the case. He analyzes the subsequent financial performance of the corporate behemoths produced by these megamergers and concludes that the majority of them were not justifiable nor, ultimately, productive. 

Davidson is an admitted skeptic about the value of mergers to the overall economy and to employees, stockholders, and consumers. He is critical of the overly optimistic rationales prevalent in today’s business climate that lead many businesspersons into mergers. For the most part, though, he keeps his biases in check. He rejects many of the common criticisms of mergers. For example, he finds unpersuasive the argument that mergers should be rejected on the ground that they undermine market competitiveness. Nor, does he say, is it worthwhile to revisit the ongoing debate over whether “‘risk arbitrageurs are good guys or bad guys.”

The author states that his “first intention [is] to paint a picture of what is happening [to] clarify the issues involved and areas of dispute.” He offers a balanced examination of the megamerger phenomenon, particularly as it pertains to the energy and financial services industries. He goes beyond seeing megamergers only as phenomena of contemporary corporate culture, and his analyses go beyond mere statistics. Megamergers have their roots not only in business ambitions and current trends, but also in human nature. Recognizing this, the author also addresses the psychology underlying megamergers. As noted in the section “The Acquisition Imperative,” mergers present a temptation to the decision-making executives of successful companies “look[ing] beyond their product and consider[ing] the disposal of excess profits.” Davidson explains why a merger appears to many executives to be a better option than distributing profits to shareholders, starting new businesses, or investing in securities. 

The informed perspective Davidson offers in this book, first published in 2003, is just as relevant today. It is a book that brings new wisdom to old ways of thinking about megamergers. 

An attorney for the U. S. Federal Trade Commission for 25 years, Kenneth M. Davidson has also been a corporate attorney and a visiting law professor.

From Michael Pertschuk, Former Chairman, Federal Trade Commission:

Davidson has written a panoramic portrait of the merger wave that has swept the corporate community. It is both wise and witty.

From Book News, Inc.:

Davidson, an attorney at the US Federal Trade Commission, portrays the players, strategies, and consequences of the 1970s-80s billion-dollar mergers and takeovers by giant oil, tobacco, automobile, steel, and financial firms. He details the economic, personal, and sociological conditions that contributed to the takeover environment, and shows that laws did not forbid large takeovers. The book was first published in 1985 by Ballinger Publishing Company. This reprinted edition contains a brief introduction by the author. Annotation ©2003

Kenneth M. Davidson has been an attorney at the United States Federal Trade Commission for 25 years. He began his career as a law professor at the State University of New York at Buffalo in 1967 and has been a visiting professor of law at the University of Maryland and the University of Bridgeport. Throughout his career he has been a featured speaker at various public forums and has written numerous columns for major newspapers. He has also appeared on television and radio interview programs. He received a B.A. from the University of Chicago (1963), a J.D. from the University of Pennsylvania (1966) and an LL.M. from the Yale Law School (1967).

Acknowledgments xi
Megamergers xiii
Chapter 1
Target Shareholders 3
Chapter 2
The Acquisition Professionals 11
Chapter 3
Takeover Laws 47
Chapter 4
Merger Wars 65
Chapter 5
Mergers and the World of Antitrust 103
Chapter 6
Merger Waves 129
Chapter 7
The Acquisition Imperative 151
Chapter 8
Strategic Investment Theories 171
Chapter 9
Practical Objectives of Mergers 193
Chapter 10
The CEO's Decision to Merge 215
Chapter 11
Acquisition Fever 229
Chapter 12
Oil Mergers 247
Chapter 13
Financial Company Mergers 267
Chapter 14
Mergers and the Concentration of Economic Power 283
Chapter 15
The Merger Market for Corporate Control 303
Chapter 16
Economic Functions of Mergers 321
Chapter 17
Merger Policy 333
More Megamergers 367
Notes 371
Bibliography 399
Index 403
About the Author 413

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