Mergers are emotional things, as any bride and groom can attest. So it's probably not surprising that every member of Congress seems to be wringing his or her hands these days over the issue of corporate takeovers. But on the central question of whether such mergers are good or bad for the country's future, remarkably few solid facts have yet come marching down the aisle.
The high-tech industry, possibly America's Number One hope for the 21st Century, provides a useful illustration. Passions - and misinformation - abound on both sides.The most compelling fear, from the standpoint of the national interest, is that the threat of hostile takeovers may force managements to concentrate unduly on short-term performance rather than on research and long-term planning.
This danger is particularly frightening, since long-term planning has scarcely been the United States' strong suit in the past generation. Indeed, the cliche has been that American corporate leaders too often are preoccupied with the next three months, while their Japanese counterparts are perpetually scanning the next three millenia.
Even though that image is badly overdrawn, anything that adds to the perception of excessive investor focus on short-term profits is naturally touchy. In reality, though, financial analysts are not quite as dumb as they have been depicted; as corporate raider Carl C. Icahn observes, the stocks of genuinely "research-driven industries, such as pharmaceuticals, aerospace and high technology . . . are generally given a high value by analysts, which discourages takeover bids."
But when Icahn argues that, as a result, "intensive takeover activity" in these research-driven industries "has not happened," he may be going too far himself.
In fact, many industry experts are looking for a record number of high-tech mergers, acquisitions and leveraged buyouts in 1989, despite the recent decline in the number of deals in almost every other area of the economy.
The computer software and service industries have already recorded a 17 percent increase in takeovers in the past two years. Among those phased in were the $830 million acquisition of Iccel Corp. by Computer Associates, Inc.; Advanced Micro Device's merger with Monolithic Memories, and Digital Communications Associates' purchase of Microstuf, Inc.
Why the rush? In addition to the factors producing other corporate mergers, analysts say the rise in solicited and unsolicited mergers indicates that the computer data processing market has started to mature after a six-year period of explosive growth.
This means that companies are being pressured to pull different types of computers into hybrid networks. In some cases, the merger deals simply help solve technological problems. Others are the result of growing financial or marketing pressures - or merely the desire to make a quick buck.
It is the last complaint that is being made by Prime Computer, Inc., as it fights a hostile bid of nearly $1.3 billion by MAI Basic Four, Inc. The takeover was delayed by Federal Judge A. David Mazzone on the unprecedented ground that there were "profound questions" about the strength of MAI's financier, Drexel Burnham Lambert, following its proposed $650 million settlement of criminal charges.
But Anthony L. Craig, Prime Computer's president, raises a direct challenge to the argument made by raiders like Icahn. "We're very concerned that much of the (brackets) takeover (unbrackets) money would be provided by `junk bonds,' " he told me. "The sky-high interest and debt load the merged companies would have to pay certainly would force slashing the research and development that not only built our firm but keeps us competitive."
Research and development investment is the foundation of all high-tech companies, since products typically have a life cycle of no more than 18 to 24 months.
The bottom line is that further consolidation in the fragmented high-tech industry is inevitable - and often desirable.