"You're Going to Kill Us Both"

Martin Marietta's Pownall recalls his epic battle with Bendix

Thomas G. Pownall, 61, chairman of Martin Marietta and a survivor of last fall's great merger battle among Bendix, Allied and Martin Marietta, has emerged as a business folk hero. On the New York Stock Exchange floor a few days ago, traders eagerly shook his hand and told him that he had fundamentally altered the merger climate by proving that a takeover target could fight back and survive. At least three books are now being written on the whole saga, and several business schools are preparing courses on it. Pownall has turned down dozens of speaking invitations, including an offer to address the West Virginia state legislature.

Allied Chairman Edward Hennessy, 55, eventually won the battle by taking over Bendix and has since pushed out former Bendix Chairman William Agee, 45. Pownall, meanwhile, has added the title of chairman to that of president and chief executive officer of Martin Marietta. His company has issued new stock and sold off chemical, cement and mining interests to reduce the staggering $1.3 billion debt largely built up during the takeover defense. But Wall Street has voiced its confidence in Pownall by pushing up Martin Marietta's stock from 33 1/8s, its price at the beginning of the battle, to 51 1/8%.

In a long talk with TIME'S Washington Contributing Editor Hugh Sidey, Pownall gave his first public reflections on the epic merger battle of 1982. Highlights of their conversation:

"The chances are fifty-fifty," said Pownall, "that if this were to have taken three months instead of one, it might have turned out differently. Agee did not pay any attention to us. If he had, he would have sensed how indignant we were right off. He never came to see me. His letter announcing the tender offer was a gun at my head.

"We were behind the power curve," he continued. "Everywhere we turned, they were there. They had signed up Hill & Knowlton and Bob Gray's public relations firms. They had called the generals and admirals in the Pentagon for whom we do work. I went over to see Frank Carlucci [then Deputy Secretary of Defense], and they had already seen him. They had called our aluminum customers. It was amazing."

Pownall's response was amazing also. Within 48 hours of the takeover bid, Martin Marietta's officers and board had concluded that Bendix would not be able to manage M-M's complex aerospace business. "Aerospace people think of themselves differently," said Pownall. "There is a special camaraderie. It is more than making money. We were glued together. We rode in the same cars, flew in the same airplanes. The fact is this was a truly great team effort, not just something that I did."

The American business community also gave some clear signals that it was rallying behind Pownall. When Martin Marietta was unable to get mid-Manhattan hotel rooms for the night before an important strategy session, Barron Hilton turned over his own Waldorf Towers suite to Pownall's five-man team.

Though Agee's move glittered on the surface, Martin Marietta learned quickly all was not well within Bendix. "There was internal evidence that came to us that the Bendix board was not enchanted with this episode, that Agee was traveling pretty much alone. Agee was operating with the investment bankers, largely outside the Bendix corporation. A couple of friends who called us said some of the Bendix people were just not aware of what was going on. When Agee and I finally met in New York, I asked him if he had approval of his board for what he was doing then. He said he had the necessary authority, that he only had to talk to two or three members. Our people got calls from former Bendix employees, and they talked about the 'unusual' Bendix management. It was more manipulating than managing. When it was all over, Mike Blumenthal [who served as chairman of Bendix before becoming Jimmy Carter's Treasury Secretary] came to me and apologized. I asked why, and he said, 'When I made Agee president, he was a different kind of man from the one he turned out to be.' "

With his board going in another direction, Agee's personal role became important. "I never disliked Agee," continued Pownall. "I still don't dislike Agee. What he did was not unAmerican. I had only met him once. I thought he was smart, shrewd, cunning, capable. I never believed that his wife [Mary Cunningham] was the force she really turned out to be. They were the action advocates totally. But we did not spend any time being angry. We really did not have any time to focus on individuals. I spent my time trying to figure out what sane people ought to be doing. Once in a while a hostile takeover is in the best interests of everybody. So we had to be sure that we were not just being insanely jealous, that we were not subliminally driven to say no at every turn. Was I trying to become King Kong? Was I doing what I was doing just because I did not want to work for Agee? After all, the men working on the problem in Martin Marietta would have been significantly better off financially if we had accepted the Bendix offer."

Pownall does not exempt himself from criticism. "I should have gone to see Agee personally at the moment we elected to go ahead and buy the Bendix stock. I should have gone to him and said, 'Bill, this is what we have done, and nothing can stop us now.' "

Weeks later, when Pownall finally saw Agee, the light was dawning. As Pownall remembers it, Agee said, "Gee, Tom, let's just find a way out of this. There is no sense for you to buy our stock. If you do, you're just going to kill us both." Pownall, reflecting on the $892.5 million his company paid for Bendix shares, now sighs and says: "If we'd only had a few more days for that idea to sink in. Perhaps we ought to have a mechanism that would slow the system down so that everybody can think before having to act."

Pownall is now reluctant to declare himself a victor, feeling only that he made the best of a very bad situation. "We cannot be construed to have been a winner, but we have our dignity, and the character of the corporation is intact. We had a chance of being pushed over the cliff, and we are still on the cliff. It sure makes life sporty." This file is automatically generated by a robot program, so viewer discretion is required.