Corporate name changes on the rise Restructurings, failures credited for 1992 increase

August 21, 1992|By Chicago Tribune, Anspach Grossman Portugal Inc., Knight Ridder News GraphicChicago Tribune

CHICAGO -- Expectant parents aren't the only ones who could use some help picking a name.

HTC For the first time in five years -- since a time when mergers and buyouts were hot -- the number of corporate name changes has jumped. More than 650 new corporate names popped up in the first half of this year, 41 percent more than in the same period last year, according to Anspach Grossman Portugal Inc., a corporate identity concern in New York.

This year's increase reflects recession-era failures and restructurings, said Joel Portugal, a partner with Anspach Grossman Portugal Inc. "The changes in the '80s were the result of growth and takeovers. In 1992, they're the result of more restructuring, simplifying and spinning off of other companies."

For example, he said, "Banks are merging and changing their names. Did those mergers come about because of economic improvements? I don't think so."

And there's a different spirit behind the changes.

"We're seeing more conservative name changes. It reflects what's going on in business and society," Mr. Portugal said. For that reason and others, changing a name is an agonizing decision. And expectant parents need worry only about offending a few possible namesakes; a chief executive has to consider not only rigid-thinking analysts on Wall Street but also cranky shareholders, an entrenched corporate culture and a cost that could run into the millions.

Sometimes they strike gold -- as when Consolidated Foods changed its name in 1985 to Sara Lee, capturing Wall Street's attention and helping catapult it to first place among Fortune magazine's most admired food companies.

But another Chicago-based company, UAL Corp., encountered more snickers than applause when it briefly changed its name to Allegis, which many thought was more suitable for a disease than a travel-industry giant.

That helps explain why there are fewer, among other things, abbreviated names -- such as Tenneco, Teledyne and Witco, which popped up during the more experimental 1960s -- and more names seeking only to clearly define what a company does, Mr. Portugal said.

The financial-services industry, which has accounted for the largest portion -- 36 percent -- of the name changes this year, saw Security Pacific renamed BankAmerica. NationsBank, which has an option to purchase the parent of Maryland National Bank, has a name created following the merger of C&S/Sovran and NCNB.

OC "They're trying to make them sound like real words, even though

they're coined names," Mr. Portugal said. "Navistar [formerly International Harvester] isn't a real word, but it sounds like it could be. And NationsBank gets the idea across that this is going to be a national bank."

Coining a name that -- sort of -- sounds like a real word, combining names when there's a merger or using the name of a company's most widely known brand have been the most common strategies in recent years, mainly because nearly all of the established words are legally taken, he said.

What's in a name?

When a corporation changes its name, the chief executive takes into consideration Wall Street analysts, shareholders, corporate culture and cost. Here are three Chicago-based companies that have changed their names:

USG

United States Gypsum to USG

USG Corp., the holding company for more than a half dozen subsidiaries, including United States Gypsum Co., decided to form the holding company to relect its changing emnphasis and the fact that it has businesses separate from the gypsum operations.

Navistar

International Harvester to Navistar

After selling off its farm equipment business, the company wanted a new image. Navistar International was chosen because, as retired Chairman Donald Lennox said, "One of the pluses of Navistar is you can make it mean whatever your imagination wants it to mean."

Sara Lee Corp

Consolidated Foods to Sara Lee

This consumer goods giant changed its name in 1985 because '' investors weren't sure what Consolidated Foods was all about. It was no longer solely a food company, so Chief Executive John Bryan changed the name to the more widely known Sara Lee in an effort to convey quality and value.

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