A Multimillion-Dollar Handshake

The deal was sealed with a handshake only a few days after the two men had been introduced by a mutual friend. They were not nearly ready to discuss the matter with their boards of directors, much less the public. But word soon began seeping out, and both knew that the Securities and Exchange Commission takes a dim view these days of executives who hold back news of pending deals. Thus last week the top men of Xerox Corp. and C.I.T. Financial Corp. announced plans to join their companies in one of the largest corporate mergers in history.

The transaction would involve trading five million shares of Xerox common stock, totaling $1.5 billion, for 19.8 million shares of C.I.T., which Xerox will value at around 70. With combined assets of $4.5 billion, the two companies are the most startling recent example of a business trend that is fast turning into a race: conglomerate mergers, or unions of companies in unrelated fields. Outwardly, Xerox and its fantastically successful photocopying machines (1967 sales: $700 million) may seem to have little in common with C.I.T., the nation's second largest finance company, which also has interests in insurance, banking and consumer goods.

A Bit Vague. While both companies' boards and stockholders have yet to approve the plan, however, it clearly made sense to Xerox President C. Peter McColough and C.I.T. Chairman L. Walter Lundell, the men who shook hands on the deal. As primarily a leaser rather than a seller of machines, Xerox needs constant access to borrowed capital, which C.I.T. now handles in sums that total up to $2 billion at any given time. Xerox has been in the market for merger partners or acquisitions for several years, ever since former President Joseph Wilson decided that "our future depends on what we do in fields other than copying." On the other hand, though C.I.T. denies any plans to scale down its auto-financing operations, it can hardly ignore the attempts of competitors to profit from computers and other business machines. For example, Baltimore's Commercial Credit Co., another leading finance firm, recently merged with Control Data Corp., a large computer manufacturer.

Both executives were a bit vague when it came to discussing what their multimillion-dollar handshake would produce. McColough noted that the merger "would provide a much broader base than we now enjoy." Said Lundell: "The merger would greatly enhance the future of C.I.T.'s growth program." Whatever its purpose, the sheer size of the deal is sure to interest the Federal Government, particularly since the Federal Trade Commission announced last July that it would look into the huge economic concentration brought about by conglomerate mergers.

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