This Merger Was No Flop

In "The case against mergers" (Special Report, Oct. 30) you list the merger of Mellon Bank Corp. and Boston Co. as part of a chart with the "worst megadeals of the 1990s." We were stunned by that inclusion, given the clear success of the merger. Here are the facts:

--The combined organization, now called Mellon Trust, has added more than $180 billion in new client assets since the merger--a 42% increase--and has increased our market share in institutional trust and custody by approximately three percentage points. In fact, with other similar mergers, companies have actually lost market share.

--Mellon reported record earnings in 1994 and three excellent quarters in 1995. In fact, we just reported record third-quarter earnings.

--Our stock is up 108% since September, 1992, when we announced our plan to acquire Boston Co.; the Standard & Poor's 500-stock index is up 48% over the same period. Our stock has also outperformed the bank-stock indexes compiled by Keefe, Bruyette & Woods Inc.

--We have increased our dividend four times in two years, for a total of 117%, and we just announced an 8 million share common-stock buyback program.

--Since we acquired Boston Co., we have reduced our long-term debt by about $1 billion and will have repurchased $900 million of equity after the 8 million share repurchase is completed next March.

In conclusion, to label the merger "one of the worst megadeals of the 1990s" is blatantly incorrect and represents a serious disservice to our shareholders, our clients, and importantly, to hundreds of employees who have worked diligently to create a successful merger of two fine companies. In fact, your own data in the article confirm the positive results we've achieved since the merger was announced. We are dismayed that BUSINESS WEEK continues to rely more heavily on uninformed perception than fact-based reality when reporting on Mellon Bank Corp.

Steven G. Elliott

Vice-Chairman and CFO

Mellon Bank


According to Securities Data Co., the value of announced domestic merger-and-acquisition transactions exceeded $347 billion in 1994 and $300 billion for the first nine months of this year. You undercounted M&A activity by more than $150 billion over the past seven quarters. This exclusion greatly compromises your otherwise well-researched article.

Richard J. Peterson

Securities Data Co.

Newark, N.J.

Editor's note: Securities Data Co. defines merger-and-acquisition activity much more broadly than Mergerstat, the merger research service used by BUSINESS WEEK. SDC counts such transactions as asset sales and purchases of small equity stakes. BUSINESS WEEK felt Mergerstat's data better reflected the deals discussed in the story.

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