Trench war for takeover: even victor may be muddy

''All's fair in love, war, and mergers.''

This Wall Street saying is coming to life as the battle to control Martin Marietta Corporation and Bendix Corporation, two of America's larger defense contractors, has taken still more twists and turns. Both companies have maneuvered enough to keep business school classes studying the struggle for years.

Their billion-dollar fight has encompassed midnight meetings, legal skirmishes, and corporate alliances. As Wolfgang Demisch, a vice-president at Morgan Stanley & Co., notes, ''These guys are in a fight with feints and blows. . . . It's trench warfare and the blood is financial.''

In the late rounds of the struggle, Bendix recruited Allied Corporation on Wednesday to buy both itself and Marietta for $2.3 billion. By Thursday, however , Allied had pulled back, since Marietta had bought 44 percent of Bendix stock as of 12:01 a.m. on Thursday. Allied had failed to file its documents at the Securities and Exchange Commission by the 5:30 p.m. closing time, and was thus unable to prevent Marietta from buying Bendix stock. On Thursday morning Marietta said it would continue its tender offer and expected to have controlling interest of Bendix by the close of business. ''Marietta is hanging in tough,'' Mr. Demisch said.

At the same time, legal battles were still being waged in Maryland and New York. Still more were expected once Marietta, a Maryland company, gained a controlling interest in Bendix, a Michigan-based company.

Marietta will be particularly eager to challenge a ''crown jewels'' agreement between Allied and Bendix. Bendix agreed to sell its aerospace assets - which Marietta would want for itself - to Allied for $800 million if it were acquired by anyone other than Allied. Since the aerospace assets are considered the ''gems'' of Bendix's assets, such a deal is termed a ''crown jewels'' agreement. Marathon Oil, in fighting off a bid by Mobil, had employed the same tactic by agreeing to sell its Yates oil field to United States Steel if it were bought by Mobil or anyone else.

Even with this maneuvering, analysts did not believe Bendix and Marietta had yet reached the final round in their struggle. For one thing, other companies were apparently still studying whether or not to enter the fray. Last week, LTV Corporation suggested to Martin Marietta that it could aid it. It is understood that Marietta rejected this offer. But Brian Saffer, an acquisition specialist at Bache Halsey Stuart Shields Inc., noted that, ''as you get into an end-game situation, it opens a variety of possibilities to make some money regardless of who wins. There will be all kinds of players trying to get a piece of the game.''

There were also reports that the two companies were going back to the negotiating table to try to iron out their differences peaceably. A spokesman for Martin Marietta denied this, however. Previous negotiations between the two companies had broken off.

The Marietta spokesman stressed that the company had every intention of proceeding with its acquisition. But on Thursday it also asked the New York Stock Exchange to continue a trading halt in its stock. The company's stock last traded at 43 1/2 on Wednesday afternoon. Marietta said it would make an announcement later Thursday.

Allied Corporation also said it would have an announcement to make and likewise asked that trading in its stock be halted. Allied's stock last traded at 35 3/8. Bendix stock last traded at 57 1/2 a share on Wednesday.

The entrance of Allied Corporation into the battle surprised some analysts. Four of Bendix's outside directors quit after Allied announced its move. Securities analysts interpreted this as a sign of dissatisfaction by the directors with the 11th-hour bid by the chemical and energy giant.

Analysts continued to stress that the merger would create financial difficulties for both companies. Mr. Demisch termed the merger ''deplorable,'' adding, ''There is no way this is generating any value whatsoever.''

From an operating perspective, the analyst continued, ''it looks like the worst of all possible worlds. The surviving management will be cash squeezed for the next two to three years and will certainly be under pressure to consider selling assets to maintain their liquidity.''

Still others were concerned about the merger from a philosophical standpoint. A spokeswoman for Sen. Edward M. Kennedy (D) of Massachusetts said he deplored such mergers, since they removed billions of dollars from the banking system which might otherwise go toward providing mortgages. The senator had no statement about this specific merger, however.

Yale Brozen, a professor of economics at the University of Chicago, on the other hand, disagrees that such large mergers drain money from the banking system. ''What does Senator Kennedy think happens to the money when the stockholders get it?'' he asks, adding, ''If anything the mergers create improvements.''

Mr. Brozen, who has just finished writing a book entitled ''Concentration, Mergers and Public Policy,'' argues that when a company pays a premium for another company, it must improve the acquired company's performance so as to pay for the premium it paid.

Half the time, he says, companies are successful at this and half the time they are not. Judging by the stock market's reaction to the initial Allied Corporation announcement of its intent to buy both companies, he notes, they were paying too high a premium. Allied stock dropped after the initial announcement.

For its part, Allied said the proposed merger would have changed its ratio of domestic to international earnings and would have allowed its own electronics business to get into the aerospace field. William Agee, the Bendix chairman, was to become the president of Allied as well as remain the chairman and chief executive officer of Bendix.

Allied has looked at other merger possibilities and previously made a bid for Marathon Oil.

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