The Friendly and Predatory Acquisition of Large U.S. Corporations in the 1960s: The Other Contested Terrain

Abstract

The 1960s represent an important chapter in U.S. business history, partly because they ushered in a new tactic of corporate combination-the predatory takeover. Predatory takeovers not only facilitate the restructuring of corporate enterprises, they also alter the internal structure of the business elite. We explore the factors that led large corporations to be acquired through friendly and predatory means in the 1960s. Consistent with the ''embeddedness'' perspective, our results indicate that the likelihood of acquisition during this period was influenced by a firm's position in the resource-dependence network of the economy as well as the positions of its managers and directors in the firm's ownership structure and in the social network of the business elite. Specifically, firms run by central managers and directors were less susceptible to predatory takeover-ownership relationships dominated over ties among the business elite. However, consistent with traditional economic accounts, our results suggest that in the 1960s undervaluation of a firm's assets, the ratio of its stock price to earnings, its performance, and its size also influenced the likelihood of acquisition.