Maryland companies make their way onto Fortune 500

Mergers, acquisitions add newcomers to list

Financial rankings

April 06, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Maryland added a handful of companies to the annual ranking of the Fortune 500 for 1999, primarily the result of mergers and acquisitions.

Hechinger Co., Integrated Health Services Inc. and U.S. Foodservice Inc. all made the magazine's list for the first time because of business pairings that bolstered their revenues.

Host Marriott Corp., the Bethesda hotel company that is one of three Marriott offshoots to be ranked, shot its way onto the list because of acquisitions. Last year, it invested more than $1.5 billion to buy lodging properties.

Fortune magazine, which ranks its 500 companies by revenue, listed Host Marriott at No. 425, with $3.5 billion in 1998 revenue.

"We see it as a testament to the quality of our management, our products and the quality of our services," said Geof Wendt, Host Marriott's director of investor relations. "It's also a testament to what we've done over the past year and the soundness of our financial situation."

Host Marriott, a real estate investment trust that controls more than $7 billion worth of hotels, ranked third on the Fortune list for lodging companies behind sister company Marriott International Inc. and Mirage Resorts Inc.

Marriott International, also based in Bethesda and which generated $7.96 billion in revenue last year, came in at No. 206.

Sodexho Marriott Services Inc., created in March 1998 through a combination of the hotel giant's services arm and the North American operations of a French catering company, represents the final leg of the Marriott triangle on the list. It ranks 247th with $6.7 billion in revenue.

Officials at Integrated Health in Owings Mills said inclusion on the list, at No. 492, ratified the company's strategy.

"We're honored by it," said Marc Levin, an executive vice president. "It reflects our growth from a company with one nursing home in 1986 to more than 1,500 post-acute service locations today, and it's a testament to the commitment of our employees throughout the company," Levin said.

But even as Maryland companies paired up to make the list, a few fell off because they either spun off divisions or were acquired by others.

Most notably, USF&G Corp. was not included because of its $3.5 billion sale to insurer St. Paul Cos. in January 1998. It ranked 422nd last year.

W. R. Grace & Co. and Millennium Chemicals Co. dropped off as a result of shedding chemical divisions or forming new entities.

Companies based here or with significant holdings in Maryland that slipped in the rankings included Giant Food Inc., Bethlehem Steel Corp., Black & Decker Corp., Lockheed Martin Corp., Baltimore Gas and Electric Co. and Times Mirror Co.

Appliance and tool maker Black & Decker, based in Towson, experienced the biggest slide, falling 51 places to No. 342.

Lockheed Martin remained the top-ranking firm with headquarters in Maryland at No. 41, with $26.6 billion in revenue. It was No. 32 in 1997.

Rather than the manufacturing orientation of longtime Maryland performers, rising Maryland companies on the Fortune 500 are geared toward service in one form or another.

Utility Conectiv Inc., formed through the merger of Delmarva Power & Light Co. and an Atlantic City, N.J., power concern; credit-card provider MBNA Corp.; Columbia-based U.S. Foodservice; retailer Rite Aid Corp.; multifaceted Cendant Corp.; and BT Alex. Brown Inc. owner Bankers Trust Corp. all made significant moves upward.

U.S. Foodservice, through a series of acquisitions, landed at No. 298. It had $5.5 billion in revenue last year.

Struggling Hechinger was ranked No. 431 because of its acquisition by Leonard Green & Partners and subsequent combination with Builders Square.

General Motors Corp., one of the area's largest employers with its Broening Highway van assembly plant, topped the list for the third year in a row with $161.3 billion in revenue.

Staff writer Sean Somerville contributed to this article.

Pub Date: 4/06/99

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