An analysis of value destruction in AT&T's acquisition of NCR

Thomas Lys*, Linda Vincent

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

116 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)353-378
Number of pages26
JournalJournal of Financial Economics
Issue number2-3
StatePublished - 1995


  • Acquisitions
  • Mergers
  • Pooling
  • Purchase

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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