Money moves
What does Houston gain — and lose — when local companies are bought up?
Houston is open for business — and everything must go!
That might be a slight exaggeration. Still, it feels like we’re living in the middle of a fire sale after news that two Houston companies are being bought up by multinational conglomerates.
News broke this week that Karbach Brewing Co. agreed to be acquired by Anheuser-BuschInBev, which controls a quarter of the world’s market share.
Beer connoisseurs have turned against the pale, yellow suds that filled every tap from Green Bay to Galveston — no matter how many talking frogs or friendly puppies grace football commercials. So InBev has spent the past several years purchasing craft brew outlets across the country. Now Houston’s own Karbach, the second-fastest growing beer company, found itself on the list. If you can’t beat ‘em, buy ‘em out. Not that there’s anything wrong with that. Houstonians should be proud to see some local entrepreneurs hit it big. But for some other H-town brewers, the buy-out just adds insult to injury. If the deal goes through, Karbach will be joining a corporation that has spent no small amount of money and influence trying to pass legislation that hurts small beer companies and prioritize the big guys.
Transitioning from amber ale to black gold, Houston’s Baker Hughes plans to merge with General Electric Oil & Gas in a $32 billion deal announced last month.
About two years ago, Halliburton proposed a merger with Baker Hughes that eventually fell apart under antitrust scrutiny. Now this smaller deal seems more likely to pass muster.
Baker Hughes has been hurting even while other oilfield service companies stabilized following the oil bust. A merger could help the company, and also give GE a boost. But what does it mean for Houston? We remember what happened when hometown Continental Airlines merged with United Airlines. Service declined, jobs left and the headquarters flew to Chicago.
The Houston Chronicle editorial board met with United CEO Oscar Munoz last month, and during the meeting it became clear that Houston has gone from the center of operations to just another hub.
Over the past several decades, deregulation and a weakening of antitrust enforcement swept across American industry. The big names once based in Houston have been bought, consolidated and moved. Hometown CEOs have been replaced by regional vice-presidents.
The effects on our city can be difficult to quantify, but you know them when you see them.
The evidence stretches 50 stories tall downtown. The towers built by Houstonbased companies stand out with unique design and striking ornamentation — buildings like Texas Commerce Tower (now JPMorgan Chase), the Gulf Building (now JPMorgan Chase) and Pennzoil Place. Now the cranes assemble glass and steel structures that have all the creativity and inspiration of an airport terminal.
As companies consolidate, big ideas give way to risk-averse caution. Longterm plans switch over to quarterly earnings. Corporate civic engagement dwindles. Brains and bodies may still work in Houston towers, but hearts live somewhere else. And even the Karbach starts to taste like Budweiser.
It is easy to measure the gains from these massive mergers. Just look at the stock market or corporate earnings.
What deserves a closer look, however, is what we lose.