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AT&T could save big, accountants say, by avoiding 'good will' in bid for NCR

Article Abstract:

Some analysts believe that AT&T could save hundreds of millions of dollars in reported profits by avoiding an accounting item called 'good will' if it changed the $6.12 billion cash-only takeover offer for NCR to a friendly stock swap. The good will item, which is the amount an acquisition's price exceeds the book value of the acquired assets, will also lead to NCR shareholders immediately paying income tax on the deal. With a friendly acquisition, stockholders merely exchange existing stock for stock in the new company, and do not pay tax until they sell the new stock. The difference between the book value of NCR, which is around $1.8 billion, and the cash offer from AT&T, is $4.35 billion. This amount would have to be written off over a period of years and would reflect as a liability, cutting into AT&T's overall annual profits.

Planning, Acquisitions and mergers, Financial Analysis Software, Strategic Planning, Stock

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AT&T, NCR called likely to renew bid for a merger accord

Article Abstract:

American Telephone & Telegraph Co (AT&T) and NCR Corp will likely try again to reach an agreement about a merger at $110 a share, or about $7.48 billion. The chances for an agreement are improved because AT&T's stock increased $1.125 a share to $37.125 on Wed, Apr 24, 1991. AT&T would use its stock to buy NCR. There are disagreements between the companies concerning the amount an NCR stockholder would receive if AT&T stock should decline during the three or four months it would take for a deal to close, but industry observers believe that the disagreements are not great and can be overcome.

Telecommunications services industry, Telecommunications industry, Telephone companies, Telephone Company, Acquisition, Merger

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