Denis Bovin, Bear Stearns' vice-chairman of investment banking, likes to think of himself as a patriotic American who has helped strengthen the us defence industry. This springs from his role in its rapid consolidation in the post-cold war era of declining military budgets. The posture has endeared him to admirals, four-star generals and other Pentagon top brass and won their favour for mega-mergers. As a result such combinations as the $6 billion Lockheed/Martin Marietta merger or the $9.2 billion Raytheon/Hughes Technology merger were possible, both deals for which Bear Stearns was adviser.
Bovin envisaged an industry that would be dominated by a few companies, much like car makers in the us. And when Bear Stearns' client Lockheed Martin, a major aerospace and defence company formed through a series of mergers, and b2 bomber maker and defence electronics firm Northrop Grumman agreed to merge last June, Bovin figured the vision was complete. The $11.6 billion merger "was the capstone deal to rationalize the industry," he says. "Everyone thought it was a logical fit."
There was just one problem. The Department of Defense concluded the merger was too logical. In March it joined with the us attorney general to announce that it would oppose the merger on anti-trust grounds.