American Telephone & Telegraph Co., seeking to build in one stroke the world-class computer business it has dreamed of since 1984, yesterday announced a $6 billion bid for NCR Corp., a leader in retail and banking computers.
NCR's board of directors rejected the bid as "grossly inadequate," a move that possibly sets the stage for a hostile takeover attempt. Corporate acquisitions of this nature have become rare in the last year.
AT&T officials declined to comment on whether the nation's largest long-distance company would increase its $90-a-share offer, saying only that NCR has until Wednesday to formally respond. AT&T officials said yesterday "the ultimate decision should be made by NCR shareholders."
The merger proposed by New York-based AT&T would rival in size the 1986 marriage of Burroughs Corp. and Sperry Corp. to create Unisys Corp. The acquisition, if approved, would follow a series of large international mergers in the computer industry in recent months.
Since Nov. 15, AT&T Chairman Robert Allen has had "thoughtful conversations" on the merger with NCR Chairman Charles Exley Jr., AT&T said in a statement. But on Friday, talks broke down and NCR has "since repeatedly refused to meet with either AT&T or its advisers," AT&T said.
In a statement, Exley appeared to warn AT&T against a hostile takeover.
"No ultimatum or demand will intimidate the board of directors of NCR into doing a disservice to the corporation, its customers, shareholders and employees," he said.
Since spinning off its telephone operating companies in 1984, AT&T has tried to turn its considerable expertise in computers into a viable business.
The company has lost billions of dollars trying, though in the last two years many analysts have said the performance of the company's computer division has improved. Although the division continues to lose money, AT&T earned $2.7 billion on overall revenue of $36 billion last year.
Ulric Weil, a Washington computer consultant, said the bid for NCR means "AT&T recognizes that they can't make it on their own."
NCR, based in Dayton, Ohio, and the nation's fifth-largest computer company with $6 billion in sales last year, has a wide range of computers but is particularly strong in point-of-sale retail systems and in computers that process banking transactions. Many of NCR's products rely on long-distance telephone and data lines to tie them together. AT&T hopes that its expertise in this field will give the two companies a winning fit.
AT&T, with a computer business largely limited to the United States, also is attracted by NCR's international presence, with more than half its sales coming from overseas.
AT&T proposes to combine the two company's computer businesses at NCR, which would be allowed to keep its current management in place.
If approved, the deal would follow a series of large-scale consolidations in the past year. France's Groupe Bull bought Zenith Electronics Corp.'s computer business; Siemens A.G. of Germany bought another German computer manufacturer, Nixdorf A.G.; and Japan's Fujitsu Ltd. bought a controlling stake in International Computers Ltd. of Great Britain.
AT&T said its $90-a-share offer represents an 88 percent premium over the $48 price for a share of NCR stock on Nov. 7, the day after reports circulated about a possible takeover. In its response, however, NCR compared the AT&T offer with NCR stock's six-month high, saying it was only 25 percent above that price.
NCR left the door open for a higher price, saying it would "carefully consider a financially sound proposal should AT&T choose to submit one."