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Merger
Boom Generates Regional
Success
The
roaring global economy includes St. Louis companies that lead
the way toward a new model of economic growth. Sverdrup, McDonnell
Douglas, General American and Boatmen's gain strength with new
partners.
Above:
The facilities company of Sverdrup Corporation, which occupies
the high-rise tower on the right and designed nearby Busch Stadium,
grew 60 percent as a result of the merger.
The
success of large corporate mergers in St. Louis seems
to have triumphed over any risk that the region might
be hit by "post-merger mania." Major deals of recent
years have passed the test of time. They've been measured
by results.
The
results matched expectations. Opinion leaders voiced
concern about the impact of mergers, but had a positive
outlook about the local economy and the growth of jobs.
Their confidence has been validated. They see evidence
now of a new model, a new reality, for business.
The
proof plays out on two fronts.
National
rankings show St. Louis leads the way toward a new definition
of a balanced economy. As a Fortune 500 headquarters location,
it ranks fifth among all metropolitan areas. At the same
time, it is second in the nation for the Inc. Magazine
list of fastest growing inner-city companies.
The
point-counterpoint of the rankings is that the "New Economy"
is not a choice between the Industrial Age and the Information
Age. It is a blend of diversified companies that are capable
of achieving global growth.
Sometimes,
the blend occurs through merger. Major local companies
that are now units of larger ones headquartered elsewhere
provide a second piece of evidence for a new reality in
the region. Their performance after mega-mergers is a
clear portrayal of foundational strength for the economic
infrastructure. Among such companies, success stories
are evident. Financial growth and community leadership
are the yardsticks.
SVERDRUP
JOINS JACOBS
Local
stalwart Sverdrup Corporation, long a leader
in engineering, architecture and construction,
merged early last year with Jacobs Engineering
Group. The first major result was a decision
to merge two subsidiaries. Sverdrup Facilities
had 800 people nationally. The CRSS unit of
Jacobs had 700. Now, they're combined at the
facilities company headquarters in downtown
St. Louis.
"We're
reaping benefits from that expanded business.
We're hiring more architects and engineers,
because we're growing so fast," says Richard
E. Beumer, Sverdrup chairman and CEO and now
vice chairman of Jacobs.
The
second post-merger action also was good news.
Jacobs formed a new construction services company
and put it here. Next, a local environmental
cleanup unit was tripled in size. The merged
companies then secured one of the most highly
sought jobs in North America--to design the
new Cooper River Bridge over an ocean shipping
channel at Charleston, S.C.
Today
there are four Sverdrup companies in the Jacobs
fold, an increase of one, and three are based
here. They are Sverdrup
CRSS, which will be re-named Jacobs Facilities,
Sverdrup Civil, Jacobs Sverdrup Construction,
and, in Tennessee, the high-tech company Sverdrup
Technology.
Steady
growth and technical excellence had been Sverdrup
hallmarks since its start in 1928. It grew
to $1 billion in revenue with 5,500 employees
in design and construction. That wasn't large
enough, though, for clients with ambitious
plans. Now, due to the merger with Jacobs,
clients can call on a powerhouse $3 billion
company with 23,000 people at 60 worldwide
locations.
Civic
commitments in St. Louis remain strong. Those
include leading its industry in per capita
giving to United Way, employee participation
in educational and charitable groups, and
leadership in civic organizations dedicated
to improving the region.
"This
merger story is such a success that we've
written a booklet about the benefits for use
when we discuss the merger with clients and
employees," Beumer says. New chapters may
be needed, as events in the Netherlands, France,
India and other growth locations continue
to reflect global gains for Jacobs and Sverdrup.
BOEING,
MCDONNELL DOUGLAS ARE #1
It
was a merger that joined two aerospace giants
whose strengths are complementary. Boeing,
with its leadership in commercial aerospace
and space systems, got world headlines three
years ago by adding McDonnell Douglas, with
its leadership in defense systems and space
systems.
The
combined company spans the world. It is
the largest manufacturer of both commercial
and military aircraft. Revenue last year
was $58 billion. There are 197,000 Boeing
employees in 27 states.
Above:
The F/A-18E/F Super Hornet, pictured
here, is the Boeing "pride of St. Louis."
It is the mainstay aircraft for the U.S.
Navy and will soon be offered internationally.
It was officially introduced into fleet
service by the Navy in 1999 and hundreds
more will be built here over the next decade.
All
the defense businesses were combined as
Boeing Military Aircraft and Missile Systems,
headquartered here. The $12 billion operation,
led by president Jerry Daniels, is Boeing's
most profitable business group.
"The
merger has been very positive," Daniels
says. "We are leveraging the best of Boeing
to win new business and improve our competitiveness.
Our Military Aircraft and Missile Systems
business is healthy and we have a strong
portfolio of emerging programs. Boeing is
committed to St. Louis and to ensuring that
our team here can continue to compete on
a global level."
In
solidifying St. Louis as one of its three
major operating sites, Boeing consolidated
work here for greater efficiency. Weapons
programs based here have grown from three
to 10. Military Aerospace Support, including
training, aircraft maintenance, aircraft
system upgrades, parts and logistics support,
was combined as one unit headquartered
here. It is the fastest growing segment
of Military Aircraft and Missile Systems,
and accounts for 25 percent of its revenue.
Good
citizenship likewise has remained strong.
St. Louis employees contributed $2.3 million
to area organizations last year through
the Employees Community Fund. The Boeing-McDonnell
Foundation and the corporation provided
an additional $6.64 million to St. Louis
metropolitan area community service organizations.
METLIFE
ACQUIRES GENAMERICA
GenAmerica
Corporation, parent of the 66-year-old
General American Life, planned to convert
from a mutual company, owned by policyholders,
to a publicly traded stock company. Then
came a surprise ratings downgrade that
caused a quick recall of funds by institutional
investors. The issue was liquidity, not
solvency, but it became necessary within
days to find a partner.
Observers
might have expected the worst, but Metropolitan
Life Insurance Company delivered an offer
to acquire GenAmerica for $1.2 billion
and keep it in St. Louis. The acquisition,
which closed in January, also offers greater
access to capital for the continuing growth
of business.
"This
relationship holds many advantages for
GenAmerica," says Richard A. Liddy, chairman,
president and CEO. "It offers the potential
of a future with stronger ratings, the
benefits of scale, stronger financial
underpinnings, and the ability to operate
more productively and efficiently."
MetLife
intends to enhance the General American
brand and continue the organization's
role as a good St. Louis corporate citizen.
It wants to grow the company as a stand-alone
subsidiary, with opportunities to leverage
best practices, and to improve operational
efficiencies.
The
outcome was not the vision of the original
plan, but it was a good one for policyholders,
the home office staff, institutional investors,
and the communities in which General American
operates. Instead of selling to investors,
including 300,000 policyholders, on the
open market, the company has one shareholder
-- MetLife. It also has a solid future
in St. Louis.
FROM
BOATMEN'S TO BANK
OF AMERICA
Hometown
institution Boatmen's grew large at
the height of bank mergers. All eyes
focused on whether it would acquire
or be acquired. No one could predict
it would join NationsBank, later to
become Bank of America, and now would
be headquarters of a 21-state franchise
for the largest bank in the nation.
"We've
moved forward on every front due to
our broadened capabilities," says David
C. Darnell, president of Bank of America,
Midwest and Texas. "We now offer a greater
range of customer services. Our foundation
has contributed more than $10 million
to local non-profit agencies. And, our
employment is at or above pre-merger
levels."
Retail
customers access a 21-state network
of 4,500 banking centers and 14,000
ATMs, with 64 bank centers and 250 ATMs
in St. Louis. New investment banking
and global trade services give commercial
and corporate customers more sophisticated
options for raising capital. Minority-owned
companies have more access to venture
capital. And, the bank has taken a leadership
role by pledging to invest $100 million
in the revitalization of downtown St.
Louis.
"We
also are small-business friendly," Darnell
says. "We're the largest lender to small
businesses in the country."
In
that phrase, Darnell captures the bottom
line of the region's post-merger environment.
Global growth capabilities are abundant,
putting merged companies in tune with
demands of the new economy. Still, they've
maintained the St. Louis spirit of personal
service that first put them on the path
to success.
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