Mergers Making News

Big mergers have dominated business news in Arkansas during the past six months.

We should be thankful that, with the exception of banking, Arkansas’ public companies generally have been on the buying end of the transaction. Talent, timing and a little luck all figure in the picture.

Here are some observations:

n The William Dillard family of Little Rock, by virtue of its ownership of nearly 4 million shares of Class B stock, will control a $9.8 billion company in Dillard’s Inc. compared with a $6.6 billion firm before the acquisition of Mercantile Stores Co.

Class B stockholders elect two-thirds of the Dillard’s board of directors, while Class A shareholders elect one-third.

The Dillard family’s stock ownership isn’t as large as one might think, especially when compared with other publicly traded family businesses like Tyson Foods Inc. and J.B. Hunt Transport Services Inc. Combined Class A and Class B stock holdings total 5.9 million shares (5.4 percent) of the company for the Dillard family.

But when you add hefty stock options, the Dillards’ holdings could quickly jump to 8.9 million shares (8.2 percent).

One wonders how long Dillard’s will continue to get beat up regarding its corporate culture.

Last week, the ABC News program “20/20” did a feature story using test shoppers at upscale retail stores. After showing discrimination by a sales clerk toward an African-American shopper at an unidentified store, the story detailed a customer’s discrimination lawsuit against Dillard’s.

This comes on the heels of continued complaints by minority groups regarding Dillard’s corporate practices.

Dillard’s has quality stores and merchandise, and it doesn’t need this ongoing negative publicity concerning correctable problems.

n Three of the big mergers already dwarf the “Top Deals of 1997” compiled by Arkansas Business.

The largest one last year was the sale of Pharmacy Corp. of America by Beverly Enterprises Inc. of Fort Smith for $869.1 million. In 1998, the Dillard’s acquisition is second only to Alltel Corp.’s $5.8 billion buyout of 360? Communications Co. of Chicago. Ranking third so far is the $2.7 billion sale of First Commercial Corp. of Little Rock to Regions Financial Corp. of Birmingham, Ala.

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Blanche Lincoln, who sailed through the Democratic primary runoff against Attorney General Winston Bryant, and state Sen. Fay Boozman, R-Rogers, will square off for the U.S. Senate in what will be one of the more interesting races to follow this fall.

For whatever reason, the major players in the business community were firmly behind her in the primary. Do they stand by her for the general election? Probably so.

While the polls don’t indicate concerns among most voters, I continue to sense a fear from business leaders — particularly those outside Northwest Arkansas — about the power shift that could take place if we have two U.S. senators from the same region.

Northwest Arkansas already has much political momentum with the election of U.S. Sen. Tim Hutchinson, the Republican from Bentonville, and Republican Gov. Mike Huckabee. Democratic political forces in Arkansas have long punished the northwest — except for the University of Arkansas at Fayetteville — for its Republican bent.

On paper, Lincoln would bring balance to the state geographically and politically, but there’s still no indication she has a clue how to get anything done if she reaches the Senate.