Third Merger Wave.

Beginning in the late 1950s and running through the 1960s, a third period of rapid corporate expansion enveloped the nation. Unlike the first two (in the 1890s and the 1920s), when companies either combined horizontally with firms involved in the same business or vertically with suppliers or customers, conglomerates combined companies in completely unrelated industries. This new corporate strategy was based on the the assumption that the firm would be protected by diversification during times of economic fluctuation — if the market was down for one product, it may not be for another. Such mergers accounted for 60 percent of all corporate combinations in the 1960s.

International Telephone and Telegraph.

International Telephone and Telegraph (ITT) conglomerate strategy was fairly typical of the decade. Originally a telecommunications firm operating in foreign countries, ITT's chief executive officer, Harold Geneen, became concerned about the...