NEW YORK -- A few years ago, a merger of Exxon and Mobil might have seemed as unlikely as, say, a professional wrestler being elected governor.
Now eye-popping mergers of giant corporate rivals are commonplace. But to anyone who fears that a handful of companies will soon take over the world, business experts say global competition is just too strong."As big as companies might seem today, actually the large companies are a smaller fraction of the market than they were 20 and 30 years ago," said Jeremy Siegel, professor of finance of the University of Pennsylvania's Wharton School of Business.
The merger frenzy has swept though a variety of industries, with many companies seeking to expand in the United States, and in developing Asian and European markets.
The quest for size and global reach has been accompanied by a focus on efficiency and cost-cutting as giant rivals combine and then slash their overlapping businesses and employees.
The oil industry, in particular, has seen huge mergers as companies look for areas to slash costs and boost profits amid a deep global slump in prices. Financial institutions are combining in efforts to provide customers with a broad new array of services from checking accounts to insurance to investment advice. Since a 1996 law freed local, long-distance and cable companies to pursue each others' businesses, phone companies have been scrambling to merge.
The result has been an array of mergers creating headlines as startling as Minnesota Gov. Jesse "The Body" Ventura: namely deals between Exxon and Mobil, Daimler-Benz and Chrysler, America Online and Netscape Communications, Travelers and Citicorp, and NationsBank and BankAmerica.
"I've long since gotten over the thought that any deal should be unthinkable," said Herald Ritch, co-head of mergers and acquisitions at Donaldson, Lufkin & Jenrette.
Some companies are trying to restore past dominance, and break into new markets.
AT&T is the best example, as the former long-distance monopoly has lost half its share of that market since being broken up by the government in 1984. AT&T is now trying furiously to crack into the local phone business and is buying cable giant Tele-Communications Inc. with a plan to one day deliver phone and Internet services through televisions.
While the combination of heavyweights might seem an unfair concentration of power, government regulators have determined that big deals do not necessarily create antitrust problems. For instance, NationsBank was allowed to buy BankAmerica, WorldCom bought MCI, Boeing bought McDonnell Douglas.
But the Washington watchdogs have forced some companies to sell off pieces of themselves if they would dominate specific markets.
Exxon and Mobil, for instance, will probably have to sell off gas stations and refineries in regions where, together, they would dominate the market.
In some cases, the feds have blocked deals entirely in less competitive industries.
In the past year and a half, regulators quashed proposed mergers between office-products retailers Staples and Office Depot, defense giants Lockheed Martin and Northrop Grumman, and the nation's top four drug wholesalers.
With Wall Street reviving from its summer slumber and once again letting companies use their high-priced stocks as currency to acquire rivals, regulators will have to be prepared for a heavier onslaught.
From electrical utilities to entertainment companies, merger watchers say the boom will continue as long as the stock market remains strong. And in the wake of deals such as Daimler-Chrylser, British Petroleum-Amoco and Deutsche Bank-Bankers Trust, big names will be coming together on a global scale.
Henry Jacoby, a management professor at the Massachusetts Institute of Technology, pointed to Rupert Murdoch's News Corp. media conglomerate and U.S. auto giants General Motors and Ford as companies that could be looking to strengthen their European operations.
"Let your imagination run," said MIT's Jacoby.