American Telephone & Telegraph Co., which Sunday made an aggressive $6 billion bid for computer maker NCR Corp., will likely succeed in its offer, industry analysts said today.
A deal would be the second-largest this year, following the $6.13 billion cash bid by Matsushita Electric Industrial Co. Ltd. for entertainment company MCA Inc.
"They're just haggling over price," said Stephen Smith, a PaineWebber analyst. "They're likely to go to the alter without too much of a fight."
Once a merger is completed, the biggest telephone company in the world probably will phase out much of its own computer operations, which have been losing money, analysts said.
"My reading on this is that AT&T is closing its own computer business and buying someone else's," said Gregory Sawers, an analyst at Sanford C. Bernstein and Co. Inc.
New York-based AT&T said it would pay $90 a share in stock for NCR. The Dayton, Ohio computer maker said it would consider the bid, although it rejected an earlier $85-per-share offer that it said was inadequate.
Analysts said AT&T is anxious to acquire NCR to bolster its lagging computer division, which has never been a strong performer.
They said AT&T likely would close its computer operations and incur charges of as much as $1 billion to $2 billion in the process.
"There'll be substantial writeoffs associated with AT&T operations if this deal goes through," said George Dellinger, who follows AT&T for County Natwest USA.
A merger would leave the two companies with, among other things, overlapping plant facilities and support services for personal computers.
PaineWebber analyst Jack Grubman said AT&T likely would move quickly to reduce its work force and close plants, taking a charge to earnings within three months of the deal's closing.
"Strategically it will be years before it is evident if this deal makes sense," Grubman said. "On paper there are clearly benefits."
When takeover speculation surfaced early last month, many analysts noted that a merger of the two companies made sense, given NCR's focus on the UNIX operating system, a standard approach invented by AT&T's Bell Laboratories.
Many NCR products are UNIX-compatible, giving customers the option to run their software on any vendors' machines.
Companies backing open systems such as UNIX are expected to whittle away market share from companies that manufacture proprietary computer systems that lock customers into one vendor because their software will not run on other machines.