Greed sank Boesky, but mergers still hint of heroes

In November 1985, a standing-room-only crowd at the University of California at Berkeley hung on Ivan F. Boesky's every word. When he told them that greed was OK, the students cheered. Obviously, Mr. Boesky's public standing has slipped a notch or two since then.

In recounting such exploits of 1985, Moira Johnston's ``Takeover: The New Wall Street Warriors'' (Arbor House Publishing, New York, $19.95) provides us with a primer and perspective on how far America's merger binge has come in a remarkably short time. Her book takes on fresh relevance as the government's inside-trading investigation digs in to past merger deals and with congressional hearings on takeovers likely in a month or two.

In ``Takeover,'' Ms. Johnston manages to capture the sizzling tension of the merger battles. The style is palatable to the unitiated and insightful to a hard-core business reader. One comes away with colorful portraits of men who have emerged as folk heroes of finance, leading this massive, ongoing industrial revolution of the 1980s.

``They are not, of course, all heroes,'' she writes. ``Some are back-knifing buccaneers, amoral as Machiavelli.'' But T.Boone Pickens and others have captured America's fancy by shattering the sedentary ``code of gray caution lived by post World War II corporate man,'' Johnston contends.

Johnston was one of several writers who ``auditioned'' (for three months, in her case) to do Mr. Pickens's biography. She didn't get the part, but it gave her some rare glimpses into the action, and it whetted her appetite.

The result is an almost front-seat ride through three major takeover sagas: Phillips Petroleum, Unocal, and TWA. One sees the development of the raiders' skills, the pivotal court cases testing their tactics, and the sudden rise of institutional shareholders as a force to be reckoned with.

There are a few revealing snippets, such as the wealthy Carl Icahn serving frozen pizza at his house during a break in the negotiations - or bringing his elderly mom to a private conference on mergers. But one senses Johnston never fully penetrated the inner sanctum. Her revelations come mostly from second-string players: the lawyers, proxy solicitors, etc. One seldom gets an exclusive view of events from Mr. Icahn, Pickens, or Sir James Goldsmith.

What one doesn't get, and also yearns for, is for Johnston to tackle some of the tougher issues arising from this corporate upheaval:

Are takeovers good for the United States economy? Should we praise the raiders for whipping American industry into a lean, mean, globally competitive machine? And just how well have the raiders helped reassert the rights of shareholders, the actual owners of a corporation, over entrenched management?

Would the bondholders of the debt-strapped Unocal applaud? Or the store owners and real estate agents of Bartlesville, Okla., home of Phillips Petroleum? Who's going to provide scholarships or fund the arts now that Gulf has left Pittsburgh?

Nonetheless, Johnston contends it is time we recognized that corporations aren't sacred cows but economic organisms that must adapt, sometimes rapidly, to survive. Her sympathies appear to lie with the raiders. A family or community may find such change hard, but it's necessary for a stronger nation, she says.

She does worry about the excesses of players such as Boesky, but Johnston writes that the takeover blitz is ``too young to assess.''

Maybe she's right. Maybe that's another book. But one feels Ms. Johnston lost some perspective and context as she got caught up in the fervor of the game itself, even as the raiders sometimes do.