What does it take these days for a small company to block a merger of large competitors? Perseverance, judging by the experience of Norwalk, Conn.-based R. C. Bigelow Inc., a $30-million maker of specialty and herbal teas. For nine months, Bigelow fought to prevent Thomas J. Lipton Inc. from acquiring its largest competitor, the Celestial Seasonings subsidiary of Kraft Inc. Bigelow never did win the case -- or lose it, for that matter -- but the delay so irritated Kraft that it began looking at other offers. In September, Kraft decided to sell Celestial Seasonings to its managers instead of to Lipton.
Bigelow had reason to fear the merger, which would have reduced the number of major players in the herbal tea market from three to two, giving Lipton an 84% share, to Bigelow's 13%. "If they had gotten together," says cochairman David Bigelow, "who was left for them to go against but Bigelow?'
The company challenged the sale on antitrust grounds at the Federal Trade Commission. After six months of investigation, the FTC declined to take action. Bigelow's only recourse was to go to court, where it had to prove it would be harmed by the future consequences of the merger -- no easy task. First, its lawyers had to wade through 350,000 pages of filings; then a federal court dismissed the case after the FTC decision. The suit was pending before an appeals court when Kraft got tired of waiting.
Ironically, one of the beneficiaries of Bigelow's tenacity is longtime competitor Celestial Seasonings, which had been sold to Kraft in 1984. Even after the sale, company president Barney Feinblum had tried to maintain Celestial's funky corporate culture, and he welcomed the chance to take the company private. His only complaint is the same as Bigelow's: the passivity of the FTC. "I was very disappointed with them," he says. "They didn't even bother to contact me [while investigating herbal tea market conditions]. I think that's disgraceful.'
"The FTC let us fight the battle for them," agrees Bigelow cochair Eunice Bigelow. "We're the little company that fought back." And, of course, the little company that won -- if only by default.
-- Martha E. Mangelsdorf* * *