March 12, 1995|By Ted Shelsby | Ted Shelsby,Sun Staff Writer
As they sat down and waited to order, however, the three men were immediately recognized. Just 20 feet away were the top managers of the Javelin, a shoulder-fired rocket designed to destroy tanks. The rocket is being jointly developed by Martin Marietta and Texas Instruments Inc.
" What brings you to town?" asked Robert E. Vaughan, Martin's program manager for Javelin.
" Oh, we're here for an investment briefing with analysts," a flustered Mr. Augustine mumbled.
" Where's the meeting? I'd like to attend."
Mr. Augustine fumbled for words again before changing the subject.
Persuading the Pentagon
By early August, both Mr. Tellep and Mr. Augustine were jittery. ++ They needed the Pentagon's approval to proceed.
Their strategy for Wednesday, August 3, was that only one of them would meet with the secretary of defense. Mr. Tellep was chosen because he'd worked with Mr. Perry's secretary for years and she could quickly arrange the confidential meeting.
Some delicacy was required. They couldn't put Mr. Perry on the spot or make him, in effect, an insider to the merger.
So it was agreed that Mr. Tellep would talk only in general terms about Lockheed's plans to merge with another defense firm. He wouldn't mention Martin Marietta unless Mr. Perry specifically asked who the other company was.
It was time for the 9 a.m. meeting in the secretary's third-floor office in the Eisenhower corridor of E-ring - the outer ring of the five-sided building. But Mr. Perry was running late and Mr. Tellep was left to wait in the outer office.
Unaware of the delay, Mr. Augustine fidgeted in the hall, about 20 paces from the entrance to the outer office.
He inspected a display case containing an olive drab, waist-length and tight-fitting military jacket with a circle of five silver stars on the epaulet - to this day known as the " Eisenhower jacket."
He glanced at the three-inch-high banner headline on the May 5, 1945 edition of the New York Herald Tribune, proclaiming " VICTORY." He read the first few paragraphs of the accompanying story about the unconditional surrender of Nazi Germany.
He looked at his watch again. Fifteen minutes had gone by. What was happening in there?
He stuck his head through the door of the outer office. Mr. Tellep instantly waved both hands in front of his chest and said, " No. No. Go away."
He got the same response when he looked in again 10 minutes later.
He was still in the hall, reading more about General Eisenhower, when Larry K. Smith, special assistant to the secretary, walked by and, ignorant of the secret merger, offered a silly pleasantry that wasn't.
" Oh, Dan Tellep is in with the secretary now. The next big merger must be Martin and Lockheed."
Mr. Augustine was too startled to reply.
" I could have died," he recalled later.
Inside the office, Mr Tellep's meeting with Mr. Perry and Deputy Secretary John M. Deutch finally had started. As planned, Mr. Tellep spoke only in vague terms. But he did make it clear that he was talking about a merger with one of the industry's leaders.
When the secretary voiced no objections to knowing more detail, Mr. Tellep left briefly, returning to the small group at the round conference table with Mr. Augustine.
His presence registered immediately with Mr. Perry.
" This is big," Mr. Perry said.
The four men discussed the merger's benefits for Lockheed, Martin Marietta and the Defense Department. The latter issue was critical in winning Mr. Perry's approval.
The merger could save the Pentagon billions of dollars over years, they explained. By reducing overhead, the new firm could bid lower for future contracts and reduce the price on current cost-plus programs.
Privately, both men were hoping to hear, " This is great. I'm all in favor of this."
But the defense secretary was circumspect.
He had no objection to the size of the companies.
But he was concerned about whether there would be adequate competition left.
Mr. Perry reminded them of new regulations requiring the Pentagon to sign off on any merger within the defense industry. And he told them he couldn't pass judgment on the plan until an impact study had been conducted.
When they left, neither man knew whether the Defense Department would approve the merger or shoot it down.
The antitrust barrier
One hundred and forty-two days had passed since Mr. Tellep's phone call to Bethes-da, but none were darker than Tuesday, August 9.
Lockheed had retained the law firm of O'Melveny & Myers, experts in antitrust. Martin Marietta had hired Dewey Ballantine.
When Mr. Tellep and Mr. Augustine met with representatives from both firms in O'Melveny & Myers's Washington offices that Tuesday, the news was all gloom and doom.
The dozen lawyers spoke one by one, and the messages were clear:
" This is an antitrust problem."
" That's an antitrust problem."
" If you move forward, you'll have to spin off big chunks of your businesses."
" You will have to sell off your satellite business."
