NCR, AT&T; Should Resume Talks, Analysts Contend
Negotiations toward a peaceful settlement to American Telephone & Telegraph’s protracted hostile takeover fight for NCR Corp. are expected to resume in the wake of several new developments, analysts said Monday.
NCR said Monday that a final accounting from last month’s shareholder meeting shows that AT&T;’s bid to oust the entire NCR board was overwhelmingly rejected and that the telecommunications giant won just four seats on the computer maker’s 12-member board.
NCR said the AT&T; motion to replace the entire board received approval from about 52% of the outstanding shares, far less than the required 80%. The vote to give AT&T; four board seats needed ratification from a simple majority of the voting shares.
In a separate announcement, NCR also said its first-quarter profit dropped because of a $7-million charge to fight AT&T;’s takeover drive. Net income for the period ended March 31 totaled $46 million, down 12% from the $52 million recorded in the year-ago quarter. Sales at the nation’s fifth-largest computer maker rose 8% to $1.4 billion in the quarter from $1.3 billion a year ago.
Analysts said the release of the quarterly profit statement and shareholder voting tallies clears the decks of incidental issues and should allow the two companies to deliver on the promise they so optimistically made nearly three weeks ago: negotiating a settlement to the four-month takeover battle.
However, in the intervening weeks, the chairmen of the two companies have talked just twice.
“There’s a lot of game playing and face saving still going on here,” said Ulrich Weil, a technology analyst in Washington. “I expect that they are going to start talking in earnest very soon--if they haven’t already.”
But sources at both companies said that now, as then, price remains the largest single issue separating NCR Chairman Charles E. Exley Jr. and AT&T; Chairman Robert E. Allen.
NCR is asking a minimum of $110 per share, or about $7 billion, while AT&T;’s best offer so far has been $100 per share, or about $6.44 billion. Last week, Exley said the company is willing to restart talks but is not willing to go below the $110-a-share asking price.
Analysts have said that from AT&T;’s perspective, an all-cash offer of $100 per share is roughly equivalent to paying NCR shareholders about $105 worth of AT&T; stock. From NCR’s perspective, a stock payout is considered preferable because it defers tax consequences until the AT&T; shares are sold.
Craig Ellis, a telecommunications analyst at C. J. Lawrence Inc. in New York, said it is now up to AT&T; to make NCR an offer it can accept if AT&T; is serious about completing a friendly deal. If not, Ellis said, AT&T; must be prepared to wait another year to try to win four more seats on the NCR board.
