There was a moment a while back when Andrew Ross Sorkin dallied with that favorite meme of The New York Times that all deals -- or most -- were bad and, of course, those progenitors of M&A, investment bankers, were Svengali-like in their baleful influence. Obviously, that was a tough position to argue for the Times' M&A reporter. These days, Sorkin has, like Arianna Huffington, swung to the other side of the aisle: Now most managements are entrenched; most boards conflicted; most companies brain dead if they don't fall into line when they get a "good" offer. That's again the line Sorkin took in his recent Times column, this time in reference to Anheuser-Busch Cos., which has received an offer from global beer giant InBev NV.
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By the way, this runs exactly contrary to Dennis Berman's hymn of praise to the "prudent," entrenched Tisches in today's Wall Street Journal.
The inner logic of Sorkin's argument is grossly ad hominem. Auggie Busch IV, the current CEO, is, in his drive-by characterization, an irresponsible, fast-car, girl-killing, feckless scion who got the job on genes (not unlike the Times' own scion). Anheuser hasn't folded yet because Auggie needs a job and the family needs an identity. And, oh, the company has been mismanaged. Well, the fact is, Sorkin may be roughly right about these characterizations, but you'd have to do your own reporting to construct some context. At the very least, it would be stupid for Auggie to toss in the towel immediately -- that would be feckless -- without extracting the last dime from InBev. And while Sorkin dismisses the beermaker's performance as pathetic, it's hard to criticize the Busch family on this score: Anheuser has dominated American beer-making to an incredible extent over the last few decades, racking up market share that all but drove rivals like Miller Brewing Co. into consolidation. Its mistake: It failed to recognize the power of M&A and globalization (not to say a weak dollar) and its market share growth, and stock price, leveled out over the past few years. Still, Warren Buffett holds it, so it's not exactly chopped liver.
Anheuser-Busch, in this regard, resembles another venerable, iconic U.S. institution with a strong culture and tradition that also failed to recognize how M&A was reshaping its world: the old J.P. Morgan & Co. While the rest of Wall Street was bulking up, the old House of Morgan was attempting to transform itself from commercial to universal bank alone. There was a sort of heroism to that attempt -- it almost worked -- but there was also a fatal touch of self regard, as if no one was quite good enough for it to buy. Anheuser-Busch has a touch of that as well. The danger, of course, is that you wind up as road kill without realizing it. Morgan was swallowed up by a merger-happy Chase in 2000. (But the name lives on: Chase is now trying to brand all of its investment bank with the J.P. Morgan name.)
Both cases point up the silliness of the absolutist argument that all M&A is bad (or good). The fact is overseas consolidators like InBev or ArcelorMittal are changing the competitive mix through creative and aggressive M&A. To ignore those forces really is fatal, as so many regional banks discovered over the past few decades. Does that mean, conversely, that all M&A is good, all offers have to be accepted or that the end result of all this consolidation (Citigroup Inc., Pfizer Inc.) is always happy? Of course not. But that's life: no absolutes. Both sides of this debate engage in a kind of theoretical fantasy lacking empirical underpinning that is as much about politics as business. Strangely enough, both work at the Times. - Robert Teitelman
