Integrating acquisitions: The Allied‐Bendix Merger

Abstract

On November 21, 1985, Allied‐Signal, Inc., announced it had lopped off 30 of its business units at one stroke. Forming the second largest corporate divestiture in history (the largest being the breakup of AT&T), the newly created corporation will have $3 billion in annual sales. The New York Times characterized the decision as “a dramatic move to undo years of diversification.” However, from Allied's point of view the strategy is part of an evolutionary process that began in 1983 when Allied merged with the Bendix Corporation, a process described by Charles Lamb in this article. Like a player in a game of rummy who picks up the discard pile to get certain cards he wants, the acquisition of Bendix and then Signal in September of 1985 left Allied's CEO Edward L. Hennessy with a handful of companies that didn't fit his plans. After he matched up the four groups of business units he wanted to keep—aerospace (40 percent), automotive (20 percent), advanced materials and chemicals (22 percent), and electronics instrumentation (13 percent)—he was ready to discard. The most famous name in his pile of castoffs was Fisher Scientific, a company that was originally acquired a year before Bendix.

Citation

Lamb, C.A. (1986), "Integrating acquisitions: The Allied‐Bendix Merger", Planning Review, Vol. 14 No. 1, pp. 6-12. https://doi.org/10.1108/eb054128