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Vertical Integration & Corporate Mergers

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(http://faculty.washington.edu/krumme/readings/mergers.html)


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January mergers set record for decade; Seattle Times, February 5, 1999 by Debora Vrana, Los Angeles Times

Announced U.S. merger and acquisition activity during January outpaced any other January this decade, signaling that 1999 may be on track to beat last year's record level of merger mania, according to Securities Data.... There were 721 announced merger and acquisition deals valued at $130.9 billion in January, an increase from the 958 deals worth $88.7 billion announced during the same time last year..."

What would oil merger mean? Consumers could benefit Seattle Times, Friday, November 27, 1998 by James Flanigan Los Angeles Times

Will consumers benefit if the oil giants Exxon and Mobil combine to create the largest nongovernment oil company? Is sheer size a threat or a boon? Would the new company ensure a secure supply of energy at reasonable prices or hold the world ransom? ... The two companies confirmed today that they are talking about a merger, but said no deal has been reached yet.

National ambitions swallow Northwest's powerhouses - Eagle, Seafirst, QFC, Fred Meyer Seattle Times, Sunday, November 29, 1998 by Robert Marshall Wells

"Area consumers could hardly be blamed if they felt a twinge of deja vu last week after learning that Eagle Hardware, the 32-store home improvement chain headquartered in Renton, was being acquired by industry giant Lowe's of North Carolina. Eagle is just the latest independent retailer in the region to be snapped up by a megacorporation. And the succession of mergers has left many wondering whether a regional retailer can remain viable in today's marketplace."

Eagle - Lowe

AOL - Netscape

Impact of defense-firm mergers worries analysts; Seattle Times, Monday, October 19, 1998; by John Diamond The Associated Press

WASHINGTON - The Pentagon is spending more than $800 million to help weapons makers merge, even though analysts worry that the defense industry is concentrated in too few hands already. Government auditors also say there's no way to track whether the mergers save taxpayer money as promised.

QFC - Fred Meyers - Kroger

  • Kroger: `QFC in a Safeway setting' Seattle Times, Thursday, November 26, 1998 by Stephen H. Dunphy One industry expert familiar with all the chains' operations involved described Kroger as a "kind of QFC in a Safeway setting." But if visits to Kroger stores in the company's headquarters city are any indication, shoppers in the Northwest have little to fear from the recent acquisition of Portland-based Fred Meyer by Kroger. The deal includes Quality Food Stores in the Seattle area, acquired this year by Fred Meyer.
  • Attention shoppers: We've been sold - again , Seattle Times, Tuesday, October 20, 1998, by Michele Matassa Flores and Joe Heim Seattle Times business reporters Paper or plastic? That may be the only choice left to shoppers - or so many fear - if the supermarket chains continue their frenzied round of mergers.
  • QFC gets another new owner: Kroger buys Fred Meyer chain ; Seattle Times, Monday, October 19, 1998, by Lee Moriwaki and Joe Heim For the second time in eight months, Bellevue-based Quality Food Centers will have a new owner as Kroger, the nation's largest supermarket chain, today announced it will buy QFC's parent, Fred Meyer, for $8 billion.
  • Fred Meyer to buy QFC
  • QFC History
  • QFC Facts
  • QFC chain buys Art's, low-cost Ballard grocery ; Seattle Times, Saturday, June 20, 1998, by Jake Batsell Art's Food Center, a Ballard institution whose wide-ranging merchandise and low prices earned customer loyalty for more than 50 years, has been acquired by the Quality Food Centers (QFC) chain.
  • Is Fred Meyer on Kroger's plate? Seattle Times, Saturday, October 17, 1998 by Lee Moriwaki "Reports surfaced yesterday that Cincinnati-based Kroger, the country's largest supermarket company, wants to buy Portland-based Fred Meyer in a potential $8.1 billion deal that would create a super-grocery chain that stretches from coast to coast."

SBC to buy Ameritech for $62 billion Seattle Times, Monday, May 11, 1998

SAN ANTONIO - SBC Communications said it will acquire Ameritech for $62 billion in stock, creating the largest U.S. local telephone company, with customers from Ohio to California.

Daimler-Benz and Chrysler:

  • Daimler-Benz Begins Stock Transfer to Complete Merger with Chrysler Germany’s biggest company embarked this week on what experts say is the biggest stock transfer action in German financial history. || [Saved] [Week in Germany Sept.25, 1998]
  • Too many cars, too few buyers Seattle Times, Sunday, May 10, 1998 [The problem: too many car factories, too few car buyers] by Seattle Times wire services "That's the costly mismatch that keeps executives up at night as the global auto industry begins what most experts agree will be a grim shake-out. While factories can build 75 million vehicles a year, there is demand for only 52 million, and new plants are still opening. The question is, who will survive? The number of automakers has fallen from 42 a generation ago to less than 20 today."
  • German Newspaper clippings (Daimler/Chrysler) [Week in Germany May 8, 1998]
  • Daimler-Benz will acquire Chrysler Seattle Times, Thursday, May 7, 1998; by John Hughes and Eric R. Quinones DETROIT - German industrial giant Daimler-Benz, the maker of Mercedes-Benz luxury cars, has agreed to acquire Chrysler for more than $38 billion in stock in a deal that weds two companies whose image and corporate cultures are vastly different.

MERGER AND ACQUISITION STRATEGIES [by Richard A. Shaw, Q.C.]

Four U.S. airlines moving to create alliances resulting in two big carriers ; Seattle Times, Friday, April 24, 1998 by Frank Swoboda, The Washington Post

"Four of the nation's largest airlines are moving toward creation of two separate domestic alliances that would effectively consolidate the industry into a handful of dominant carriers. ... American Airlines and US Airways ... agreed on a broad new marketing relationship that will eventually treat their respective routes as a single airline. United Airlines and Delta Air Lines are expected to announce a similar alliance soon. Continental and Northwest Airlines announced a similar link earlier this year, sparking the new actions by their competitors...."

Megamerger speedup sweeps four more banks Seattle Times, Monday, April 13, 1998 by Eric R. Quinones

"NationsBank and BankAmerica said today they were merging in a $59.3 billion deal to create a coast-to-coast banking giant, and Banc One is combining with First Chicago NBD in a $29.8 billion union to create the dominant bank in the Midwest. The two megamergers come after last week's planned union of banking giant Citicorp and brokerage and insurer Travelers Group pressured other financial companies to accelerate their already furious consolidation."

Literature (Mergers):

Aliberti, Vincenzo. (1998). Canadian Domestic and International Mergers and Acquistions Activity. Ph.D. Dissertation in the Department of Geography. The University of Western Ontario, London, Ontario, Canada.

Aliberti, Vincenzo. (1998). Canadian Domestic and International Mergers and Acquistions Activity: A Spatial Imperfections Dimension. Dissertation.com.

Aliberti, Vincenzo and Green, Milford B. (1999). A Spatio-Temporal Examination of Canada's Domestic Merger Activity, 1971-1991. Cahiers de giographie du Quibec vol. 119, pgs. 239-250

Andrade, Gregor, Mark Mitchell, and Erik Stafford, "New Evidence and Perspectives on Mergers," Journal on Economic Perspectives, 15(2), Spring 2001, 103-20.

Browne, L.E. and E.S. Rosengren, eds., The Merger Boom. Federal Reserve Bank of Boston, 1987.

Green, Milford, "Merger Behavior for the United States: Some Spatial Aspects," GeoJournal 15(1), 1987, pp.97ff.

Green, Milford B., Mergers and acquisitions: geographical and spatial perspectives. London ; New York : Routledge, 1990 [ HD2746.5 .G74 1990 ]

Lotterman, Edward. Poultry: A quiet success story: Geography and vertical integration are key factors in poultry industry's development, fedgazette, Minnesota, April 1998.

McCabe, Mark, J., Assistant Professor of Economics, Georgia Institute of Technology The Impact of Publisher Mergers on Journal Prices: An Update.

O'hUallachain, B. and D. Wassermanm, "Vertical Integration in a Lean Supply Chain: Brazilian Automobile Component Parts", Economic Geography 75(1), 1999, 21-42.

Ramu, S.Shiva. Restructuring and Break-ups: Corporate Growth through Divestitures, Spin-offs, Split-ups and Swaps. New Delhi: Response Books, 1999 [HD2746.5 S544.1999]

Silver, A.David. The Middle-Market Business Acquisition Directory and Source Book. NN.Y.: Harper Business, 1990.

VLASIC, Bill & BRADLEY A. STERTZ, Taken for a Ride: How Daimler-Benz Drove off with Chrysler, Wiley (William Morrow & Company, Inc.), 2000.

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