Museum of American Finance
Penn Central Company stock certificate, dated September 30, 1969. The end of the conglomerate era is often tied to Penn Central’ s 1970 bankruptcy.
their stocks traded at a conglomerate discount, meaning that their market capitalizations were less than the collective value of their constituent businesses. Over the 13 years in which the S & P Conglomerates subindex existed, it produced an annualized total return of 1.42 %. The comparable figure for the full S & P 500 was 12.82 %.
Subsequent histories of the great conglomerates followed a recognizable pattern. The pioneer American Home Products spun off its food unit in 1996. After a series of aborted mergers, it changed its name to Wyeth in 2002 and was acquired by Pfizer in 2009. Ling-Temco-Vought demoted Jimmy Ling from his CEO post in 1970 and he subsequently resigned. The next year the company sold Braniff and Okonite as part of an antitrust settlement. In 1986, LTV, as it was then called, made the biggest US bankruptcy filing ever up until that point. The remains emerged from bankruptcy seven years later as mainly a steel producer named LTV Steel, which went bankrupt again in 2000. Its assets were acquired in 2001 by Wilbur Ross, who merged it with Weirton Steel to form International Steel Group.
Litton began exiting various businesses in the 1970s. It split into a military operation and a commercial company named Western Atlas. The military business was acquired by Northrop Grumman in 2001.
After Gulf & Western’ s stock price cratered, Bluhdorn said he was out of the acquisitions business. From that point on, he concentrated on Paramount, funneling funds to it from G & W’ s less glamorous businesses. After Bluhdorn’ s death in 1983, the company sold its auto parts, clothing, bedding and financial services businesses and renamed itself Paramount Communications.
Conglomerates and the Market for Corporate Control
Conglomerates faded from the limelight, but they left a legacy in what is known as the market for corporate control. Hostile takeovers were part of the conglomerators’ toolkit. In the 1980s, the technique was employed in many acquisitions made by leveraged buyout( LBO) firms, nowadays dubbed“ private equity.” Author Donald Chew has written extensively about LBOs’ role in wresting control of undermanaged companies and creating value by making them more efficient.( There were also cases of LBOs stripping the acquired companies of assets, leaving them in worse shape than before.) Ironically, the conglomerates themselves became targets of activist investors. The corporate raiders sought to profit from the conglomerate discount through takeovers premised on breakups.
Private equity firms ultimately emerged as more effective vehicles than conglomerates for succeeding in the market for corporate control. Their model was not to continue amassing companies indefinitely, but rather to dispose of them at a profit, either through sales to corporate buyers or to other LBO shops or through public offerings. With private equity firms such as
KKR, Blackstone and Apollo now publicly listed companies, however, it is intriguing to note certain resemblances between them and the conglomerates of old, even if Standard & Poor’ s classifies them as Asset Management & Custody Banks.
Martin Fridson is Chief Investment Officer of Lehmann Livian Fridson Advisors LLC. He is a longtime strategist and researcher whose innovations include the distress ratio, econometric modeling of the high yield risk premium and the equalized ratings mix approach to valuation. He has been a trustee of the Museum of American Finance since 2022.
The author thanks Martha Clark Goss for her valuable contributions to the research for this article.
Sources
Chew, Donald H. The Making of Modern Corporate Finance: A History of the Ideas and How They Help Build the Wealth of Nations. Columbia University Press. 2025.
Hallock, Kevin F.“ The Relationship Between Company Size and CEO Pay.” Workspan. 2011.
Sobel, Robert. The Rise and Fall of the Conglomerate Kings. Beard Books. 1981.
Thomas, Lauren and Ben Dummett.“ Ferrero Strikes Roughly $ 3 Billion Deal for Maker of Froot Loops, Frosted Flakes.” The Wall Street Journal. July 10, 2024.
Watson, Fraser.“ F1 Releases Statement Explaining Decision to Give General Motors 11th Team.” Daily Express US. November 26, 2025.
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