Merger Mania In Full Flower As Spring Deals Dominate Wall Street

Wow! Only one day into the second quarter and the mergers business is already on a tear.

U.S. companies announced about $28 billion worth of mergers Monday, more than 10 percent of the amount unveiled in the entire first quarter.

“It’s staggering,” said M. William Benedetto, of the investment banking firm Benedetto, Gartland & Greene.

The transactions announced Monday include:

SBC Communications Inc.’s plan to buy Pacific Telesis Group for $15.7 billion, creating the second-largest U.S. telecommunications company behind AT&T Corp.

Aetna Life & Casualty Co.’s agreement to purchase U.S. Healthcare Inc. for $8.9 billion, forming the largest U.S. managed-care provider.

Allegheny Ludlum Corp.’s bid to buy Teledyne Inc. in a $2.04 billion stock swap.

Masco Corp.’s decision to sell its furniture business to a holding company that includes a Citicorp unit for $1 billion.

And that doesn’t include the bevy of sales valued at less than $1 billion.

Mergers are surging, bolstered by rising stock markets and low interest rates. The torrid pace indicates 1996 may exceed the record $866 billion of mergers last year.

Four of the 10 largest mergers of all time were announced or completed in the first three months and one day of 1996. The SBC-Pacific Telesis deal would be the second largest of this year, behind Walt Disney Co.’s purchase of Capital Cities/ABC, and No. 4 all time.

The Monday mergers helped boost the Dow Jones industrial average, the stock market’s blue-chip index, 50.58 points to 5637.72.

Analysts expect more high-profile mergers, particularly in the rapidly changing telecommunications industry. Competitors will feel pressure to match SBC’s move.

“The heat in the kitchen just got a lot hotter,” said Peter Pratt, a telecommunications analyst with the Business Research Group of Newton, Mass.

Whereas the Baby Bell marriage was made possible by a new telecommunications law, the Aetna-U.S. Healthcare deal was driven by market forces in the health care industry.

“This is the formation of another formidable managed-care powerhouse,” said Wheat First Butcher Singer analyst Joel Ray. “These mega-managed-care companies have the potential to be exceedingly competitive…”