AT&T; Expected to Sweeten Takeover Bid for NCR Corp.
NCR Corp. shares continued to rise Friday amid increasing expectation that American Telephone & Telegraph will soon sweeten its hostile takeover bid for the computer maker above the current $90-a-share, all-cash price.
NCR stock, which has benefited along with other high-technology issues in the market’s recent run-up, closed Friday at $98.25 per share, up 62.5 cents on moderately active trading on the New York Stock Exchange.
Although NCR and AT&T; officials refused to comment on the increasing speculation of a pending settlement to the 3-month-old takeover battle, several Wall Street analysts say a friendly deal is likely before the end of this month, when the fight is scheduled to go to NCR’s shareholders for possible resolution.
Stephen Smith, a Paine Webber analyst, said he would not be surprised if AT&T; made a higher offer as early as this weekend. “This could all be over by Monday,” he said.
Some analysts said AT&T; is likely to increase its bid to between $105 and $110 per share--but in AT&T; stock, not cash. From AT&T;’s perspective, analysts said, that would be roughly equivalent to a $90-per-share, all-cash offer. And NCR shareholders, they added, might favor a stock swap because the tax consequences would be postponed until they sold the AT&T; shares.
“A higher bid is a possibility and well within the realm of AT&T;’s thinking,” said Craig Ellis, a telecommunications analyst with C. J. Lawrence in New York. “And I think they would like to get this done before March 28 so they can go into the NCR annual meeting with a ‘done deal.’ ”
However, NCR Chairman Charles E. Exley Jr. has steadfastly opposed AT&T;’s takeover bid since it was formally unveiled Dec. 3. Exley has repeatedly said NCR, the nation’s fifth-largest computer maker, would be far better off as an independent company than as the vehicle to revive AT&T;’s stumbling and unsuccessful efforts to enter the computer business.
But Exley has also said that if AT&T; really wants the company, he would agree to negotiate a deal only after AT&T; made an offer of $125 per share. AT&T;, which has scoffed at the $125 demand, has said it is willing to increase its $90 offer if NCR could show good reasons for it.
As the two sides have waged a war of words and lawsuits over the last three months, the stage has been set for some sort of a resolution at a special shareholders’ meeting before the company’s annual meeting March 28.
At this meeting, AT&T; will attempt to oust the entire NCR board and install a team favorable to negotiating a merger. However, to do this, AT&T; needs support from 80% of the shareholders, a level most analysts consider highly unlikely. More likely, they say, is that AT&T; will muster the 50% shareholder vote necessary to replace four of the 20 NCR board members.
However, with just four board members and the possibility of increasing its presence by just four seats each year, it would take AT&T; three years to gain control of NCR.
Analysts say this factor is weighing heavily on AT&T; to increase its bid. In addition, they say, the run-up in stock prices, particularly high-technology issues, has improved NCR’s chances of gaining a higher price for its shares.
