15. "SOCIAL AND ECONOMIC CONSEQUENCES OF THE MERGER MOVEMENT IN WISCONSIN," BY PROF. JON G. UDELL, GRADUATE SCHOOL OF BUSINESS, THE UNIVERSITY OF WISCONSIN, MAY 1969

Social

and Economic Consequences of the

Merger Movement in Wisconsin

by

Jon G. Udell

Graduate School of Business
The University of Wisconsin

ACKNOWLEDGMENTS

The financial support for the research was provided by the Division of Economic Development of the Department of Local Affairs and Development and the Graduate School of Business of The University of Wisconsin. Equally important were the personal contributions of time and effort so generously given by Palmer McConnell, Kenneth Haagensen, and other members of the Merger Study Commission, Courtland Conlee of the Milwaukee Journal Company, Raymond McClelland and Robert Anthony of the United Fund of Milwaukee, and Orin Reich and Sidney Knope of Wisconsin's Department of Industry, Labor, and Human Relations.

The author is also grateful to the presidents of the Wisconsin firms who participated in the management survey of acquired companies, the Chamber of Commerce and newspaper executives, and members of the general public who participated in the surveys of Wisconsin communities.

The study would not have been possible without the able assistance of Robert Smith, Leigh Lawton, and Keith Davis--all graduate students in the School of Business of The University of Wisconsin, and Mrs. Jean Robertson and Mrs. Linda Kohl of the staff of the Bureau of Business Research and Service. A vote of thanks also goes to the members of The University of Wisconsin chapter of Alpha Kappa Psi, the professional business fraternity, for giving part of their Christmas recess to conduct personal interviews.

FOREWORD

This is a study of the social and economic consequences of the acquisition of Wisconsin firms by Wisconsin and out-of-state corporations. Because many of the larger mergers occurring in recent years were of the conglomerate type, the study is, to a major extent, one of conglomerate acquisitions.

While the Federal Trade Commission and others are attempting to evaluate the relationship of conglomerate mergers to competition and prices, this research emphasizes other possible social and economic implications of the merger movement. Among the topics covered are changes in the growth of employment and payrolls, the movement of corporate headquarters and company executives, and changes in corporate

contributions and support of community causes.

While

Each of the subjects explored by the study could easily have consumed the entire research effort, which spanned less than six months. additional research may be desirable to further confirm or deny the findings of this study, several analyses are quite conclusive. Among them is the effect of acquisitions on the growth of employment and payrolls in Wisconsin.

Further research is needed to investigate those social and economic consequences of corporate acquisitions that have not been explored by this study, such as the impact of acquisitions on Wisconsin's income tax receipts. The author invites others to join him in future research on the merger movement in Wisconsin and other states.

TABLE OF CONTENTS

SUBJECT

Chapter:

I. Possible Social and Economic Implications of

Corporate Acquisitions___.

II. Effect of Corporate Mergers as Seen by Newspaper

Page

149

Executives in Wisconsin__

153

III. Effect of Corporate Mergers as Seen by Local Cham-
bers of Commerce in Wisconsin...

156

IV. Effect of Mergers as Seen by Management of Ac-
quired Companies..

158

V. Public Reaction to Corporate Mergers_.
VI. Impact of Corporate Mergers on Employment and
Payrolls in Wisconsin...

164

166

VII. Mergers and Corporate Giving in Milwaukee..
VIII. Summary, Conclusions, and Recommendations.

(148)

182

189