AT&T; Launches a Hostile Bid for NCR : Technology: The computer company’s chairman is still opposed to a merger. Some analysts are saying it’s a done deal--except for the price.
American Telephone & Telegraph launched its $90-a-share hostile tender offer for NCR Corp. on Thursday and reiterated that it is willing to discuss a higher price. But an angry and adamant NCR Chairman Charles E. Exley Jr. said his firm would not entertain any talks unless AT&T; met its demand for $125 per share.
“I frankly don’t think a deal makes sense at any price,” Exley said in an interview. “But even though I hate the idea of a merger, I’m obliged to go along at some price. And $125 a share is that price. . . . And I don’t mean $124.50. I mean $125.”
However, Wall Street investors and speculators, who may determine the outcome of the deal, were clearly betting on a negotiated settlement. They bid up the price of NCR stock by $6.125 to a close of $92.75 per share Thursday. Since Sunday, when AT&T; announced that it would make a $6.1-billion takeover offer for the nation’s fifth-largest computer company, NCR stock has risen $36 per share, or about 63%.
Analysts said a substantial portion of the shares is probably now held by arbitragers, who are likely to accept a sweetened offer from AT&T;, regardless of Exley’s position.
“Exley is just posturing,” said John Jones, a technology analyst at Montgomery Securities in San Francisco. “His problem is that this is really a done deal. The only question is really at what price.”
Exley acknowledged that experts would give his company a “less than 10% chance” of remaining independent. “I think we have a better chance,” he said, but declined to specify his own odds.
He argued that even if AT&T; is successful in persuading shareholders to tender their shares, the company’s recently fortified anti-takeover defenses would spark a protracted and costly battle. But analysts dismissed that argument, noting that NCR’s current shareholders are likely to demand that the company go along with the buyout, allowing them to cash in their stock profits.
AT&T; announced Thursday that it has received a $600-million line of credit from Chemical Bank, which will lead a group of banks financing the deal.
Meanwhile, Robert Kavner, the AT&T; computer systems executive widely credited as the architect of the telephone company’s bold takeover move, said in a separate interview that AT&T; remains confident that some sort of deal will be struck.
“A merger will occur,” Kavner said. “We think $90 is a fair price, but we’re ready to go back to the table to negotiate anything, including price.”
Exley, however, noted that he can’t recall a single successful high-technology merger in his 36-year career in computers.
He said he rejected a similar offer from AT&T; in 1988, and the telecommunications giant backed off. “We weren’t for sale then, and we’re not for sale now,” he said. “I want them to go away and leave us alone.”
Exley repeated his earlier promise to resign if AT&T; purchases NCR--at any price.
Kavner said AT&T;’s effort to merge with NCR would not be affected if Exley made good on his promise to leave. And he discounted the possibility that the NCR chairman would spark a mass resignation.
“There is no example of a well-executed merger where there has been a mass exodus of the top management,” he said. “A mass exodus is a sign of the acquiring company not knowing how to manage a merger. If this happened, it would be shame on AT&T.;”
The AT&T; tender offer is set to expire Jan. 4.
