NCR Plans to Acquire Teradata In $520 Million Share Exchange
Teradata Corp., a maker of specialized computers used by some of the country's biggest banks, will be acquired by NCR Corp., it was announced Monday.
The deal, a stock swap valued at $520 million, caps a relationship between the two companies that began last year.
NCR bought a 9% stake in Teradata in early 1990 - well before its own acquisition by American Telephone and Telgraph Co. - and formed a partnership for joint development of specialized high-performance computers.
Teradata's chief scientist then joined NCR to head up development of the new line of computers.
The merger will broaden the product line that NCR markets to banks and will give Teradata stronger financial, marketing, and distribution support for its computers, observers said.
View at NCNB
"It has the potential of being a very positive move," said Deepak Gupte, executive vice president at NCNB Corp., which is using a Teradata computer for its customer information system. "It brings the financial and marketing muscle of a strong company like NCR to bear."
Teradata, based in El Segundo, Calif., was one of the first makers of business computers to use parallel processing techniques. Parallel processing breaks up big computational problems into pieces that can be worked on simultaneously.
Computers that use parallel processing are able quickly to process data-intensive problems that take traditional computer days or even weeks to complete. Many firms, including some in the financial services industry, are beginning to use parallel processing systems to solve complex computing tasks using extremely large data bases.
Citicorp, in particular, has long been interested in data base processing technologies. Two Teradata founders are former executives of the banking company's Transaction Technology Inc. subsidiary. Citicorp also invested start-up venture capital in the company and as late as September held a 5.7% stake.
The banking company has since significantly reduced its holding, but it is still one of Teradata's biggest customers, having installed about a dozen systems.
Dayton, Ohio-based NCR also employs parallel processing in its new top-of-the-line computers. The acquired company will continue to market under the Teradata name for a transition period, but NCR will eventually bring Teradata products into its own "open systems" family of computers.
Many Big-Company Users
Analysts said they expect NCR to maintain Teradata's systems as a separate product line because they are specialized computers, whereas NCR high-end systems are general-purpose computers.
Teradata computers are used by many large banking companies in addition to Citicorp, including BankAmerica Corp., NCNB, Chemical Banking Corp., and several European banking powerhouses. They use Teradata computers to manage large sets of data on customers, products, and demographics. AT&T, NCR's parent, is also a big user of Teradata computers.
Another parallel-processing advocate is American Express Co. It recently ordered two parallel processing computers from Cambridge, Mass.-based Thinking Machines Corp., to cull through customer data and develop better-focused direct-mail lists.
Teradata systems, which have an average price tag of $1.6 million, offer better price-performance value than traditionally designed mainframe computers. The parallel processors have special features that allow them to tap information from many other computer systems and merge it for marketing purposes.
For example, banks might use the Teradata system when assembling regional marketing plans for home equity loans. Such a system can search data bases to find out how many customers in a particular city or town with savings account balances of more than $2,000 do not have a home equity loan with the bank.