Journal of Financial Economics Vol. 39 No. 2-3 1995
An analysis of value destruction in AT&T's acquisition of NCR
Abstract
AT&T's 7.5 billion acquisition of NCR decreased the wealth of AT&T shareholders by between 3.9 billion and 6.5 billion and resulted in negative synergies of 1.3 to 3.0 billion. We find that AT&T paid a documented 50 million and possibly as much as $500 million to satisfy pooling accounting, thus boosting EPS by roughly 17% but leaving cash flows unchanged. We conclude that AT&T's decision to acquire NCR in what the market perceived as a value-destroying transaction was related at least in part to the 1984 consent decree with the Department of Justice that led to the break-up of AT&T.
- DOI
- 10.1016/0304-405x(95)00831-x
- Volume
- 39
- Issue
- 2-3
- Pages
- 353-378
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib