AT&T, NCR announce $7.4 billion merger

NEW YORK -- American Telephone & Telegraph Co. and NCR Corp. Monday jointly announced they have signed a definitive merger agreement for the acquisition of NCR by AT&T in an all-stock transaction valued at approximately $7.4 billion.

Under the agreement, which is subject to approval by NCR stockholders, each NCR share would be exchanged for $110 worth of AT&T shares. The exchange, however, is subject to a formula by which NCR shareholders would receive no more than 3.223 and no less than 2.708 AT& T shares for each share of NCR stock they own.


'I am very pleased that agreement has now been reached on a merger of our great organizations,' said AT&T Chairman Robert E. Allen. 'The company that will emerge will be uniquely equipped to meet what customers will need in the future -- global computer networks as easy to use and as accessible as the telephone network is today.


'The joining of these two companies will create a powerful competitor in the world marketplace for information systems.'

NCR Chairman and Chief Executive Officer Charles E. Exley Jr. said, 'Both sides anticipate a high degree of cooperation during the interim period. I have no doubt that together we can do what needs to be done.'

The all-stock merger would be tax free to NCR stockholders, the companies said.

If AT&T is unable to satisfy itself that an all-stock merger could be accounted for as a 'pooling of interests,' the merger would be converted to a cash election merger.

In the cash election merger, 40 percent of NCR's shares would be exchanged for $110 cash a share. The remaining 60 percent of NCR's shares would be exchanged for $110 in AT&T stock, provided that the average closing price of AT&T stock during a 20-day pricing period is not outside a $34.125 to $40.625 'collar.'

If AT&T's average closing price is outside the collar, the number of AT&T shares to be received in the cash election merger would be adjusted. The aggregate value to be received by NCR stockholders would be the same as in the all-stock merger.


In the stock transaction, the exact number of AT&T shares to be exchanged for each NCR share would be determined by dividing $110 by the average closing price of AT&T stock during the 20 trading days ending on the fifth trading day prior to NCR stockholders voting on the merger

NCR stockholders would receive 3.223 AT&T shares if AT&T's stock price were $34.125 or less and the 2.708 shares if AT&T stock were $40. 625 or more.

AT&T and NCR will have joint discussions with the Securities and Exchange Commission to determine if the transaction can qualify for 'pooling of interests' accounting, in which the assets and liabilities of the two merged companies are combined, the companies said.

AT&T noted that integrating AT&T's operations with NCR will result in a computer business that will be a strong contributor to AT&T's overall results. The company said the agreement is expected to enhance AT&T's long-term earnings and financial position and will not affect its dividend policy.

As previously disclosed, the costs of bringing the businesses together are expected to result in one-time, material charges to AT&T's earnings. The amount and timing will not be known until the merger is completed and the transition plan is implemented.


Allen emphasized that AT&T intends to continue NCR's and AT&T's focus on long-term commitments to stakeholders and to quality, reliability and service.

'My assurances during the negotiations that NCR would remain intact were not just campaign rhetoric,' Allen said. 'We intend that NCR's corporate structure, executive leadership and, of course, its name will remain as NCR takes its place as the core of AT&T's computing business.

'NCR's headquarters will remain in Dayton. And the combined business would also continue to support the civic and philanthropic organizations with which NCR and AT&T have been identified in the past.'

AT&T said it is committed to preserving jobs of AT&T employees who may be affected by the merger. Allen noted that AT&T is making 'extraordinary efforts,' including implementing hiring restrictions throughout the company.

AT&T said that with the signing of the merger agreement it has terminated its $90 a share cash tender for NCR.

The next steps in the process include a review by the SEC of proxy and prospectus information which will be mailed to NCR shareowners. An NCR stockholder meeting would then be held. A two-thirds vote of the outstanding shares is required for approval. The process is expected to take four to five months to complete, the companies said.


The two companies had combined revenues, based on 1990 results, of $43.6 billion. Combined assets total $48 billion.

NCR, which has 55,000 employees, is the fifth largest U.S. computer company. It has operations in 120 countries and derives more than 60 percent of its revenues from outside the U.S.

AT&T, with about 273,000 employees, has been increasing its international activities in recent years. About 19,000 of the telecommunications company's employees are based in 41 countries outside the United States.

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