Investors Bet on AT&T; NCR Stock Hits New High
NCR Corp.’s stock price shot up to an all-time high Monday as investors bet again that American Telephone & Telegraph Co.’s protracted drive to acquire NCR would succeed now that it has raised its bid to the $110-per-share price NCR had demanded.
However, NCR officials said the company has not accepted AT&T;’s latest bid and will not until it receives “reasonable assurances” that AT&T;’s stock swap offer will be worth $110 per share when the deal closes. NCR stock closed Monday at $102 per share, up $5.25.
“We have neither accepted nor rejected the offer,” said an NCR spokesman. “We’re still studying it.”
Late Sunday, AT&T; boosted its bid to the equivalent of $110 a share by offering 2.943 shares of its stock for each share of NCR stock. However, the offer, worth a total of about $7.48 billion, was based on AT&T;’s stock being worth $37.375 per share, its closing price last Friday.
Monday, AT&T; stock dropped $1.25 per share to close at $36.125, apparently the result of investor concerns that a purchase of NCR would dilute earnings and temporarily disrupt shareholder value. AT&T; shares were the most actively traded on the New York Stock Exchange.
NCR Chairman Charles E. Exley has said he will not recommend that his board accept the latest offer until receiving assurances that NCR shareholders would be protected if AT&T; stock should drop further.
AT&T;’s bid does offer some protection, but it’s by no means complete.
In its latest offer, AT&T;’s guarantees its $110 price only in the event its stock price stays at $35.50 and above. If the stock dips below that threshold, NCR shareholders could only receive a maximum of about 3.099 shares of AT&T; stock for each of their shares.
Some analysts say Exley’s latest demand uncovers a basic flaw in AT&T;’s latest offer.
According to analyst Craig Ellis of C. J. Lawrence Inc. in New York, AT&T;’s initial $90-per-share offer was worth the equivalent of about three AT&T; shares for each NCR share. And despite the appearances of a “sweetened” offer, he notes, the latest deal is still basically a 3-for-1 offer.
