An unsolicited offer made by technology conglomerate United
Technologies Corporation (UTC) to acquire all the outstanding
shares of financial self-service hardware manufacturer and
outsourcing services provider Diebold has been unanimously rejected
by Diebold’s directors. Seemingly generous, UTC’s cash offer of $40
per Diebold share is 66 percent above its price just prior to the
offer and values Diebold at $2.6 billion.
UTC may even up its offer for Diebold, indicated UTC’s chairman
and CEO, George David, in a letter to Diebold’s chairman, John N
Lauer. “We have suggested appropriate due diligence earlier and
affirm this now. Additional value could be identified, and a higher
price proposal for Diebold’s shares could result. We are prepared
to begin immediately and believe a definitive agreement can be
completed within 30 days,” wrote David.
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However, far from being swayed, Lauer replied in a letter to
David that UTC’s offer was an “opportunistic attempt to acquire
Diebold at an inadequate price that does not reflect significant
progress against our current strategic initiatives”. Lauer noted
that the $40 per share offer was 27 percent below Diebold’s 52-week
high of $54.50 reached in July 2007.
In addition, continued Lauer, UTC’s offer does not reflect a US
ATM and financial self-service environment that is anticipated to
improve in 2009, important opportunities for growth overseas and
cost initiatives that are on track to eliminate an initial $100
million from Diebold’s cost structure by the end of 2008. He added
that Diebold is finalising additional strategic initiatives that
would result in further substantial cost savings.
“In short, we are confident in the management team’s ability to
significantly grow margins in the near term and achieve stand-alone
value well in excess of your [UTC’s] offer,” said Lauer.
Delay in filing
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By GlobalDataUTC’s offer comes at a time when Diebold has been unable to file
its 2007 annual report within the time period prescribed by the
Securities and Exchange Commission (SEC). The delay followed
discussions with the SEC that resulted in Diebold agreeing to
restate its results for the four years ended 2006 and the first
quarter of 2007 to revise its method of recognising
revenue.
