UTC announces bid to buy Diebold for $3 billion
HARTFORD, Conn.--Diebold stockholders have a serious proposal to consider. United Technologies, whose UTC Fire & Security branch owns integration firm Red Hawk, has offered $40 a share to purchase all outstanding shares of Diebold, which makes ATMs and operates a significant security integration business.
The offer represents a roughly 60 percent premium over the Feb. 29 close of $24.12. And stockholders may be eager to accept, as Diebold's stock price has fallen nearly 50 percent in just the last six months and the proposal represents a price stockholders haven't seen since November.
In a press release, UTC pegged the total enterprise value at $3 billion, though some Wall Street analysts have set the total lower. Perhaps most significantly, UTC has stated that "the proposal is not subject to any financing contingency."
"It seems that UTC is beginning to resemble Tyco in its hey-day," said Jack Mallon, managing director at Mallon & Associates, "attempting to gobble up mega-security companies and assets, which isn't all bad, because at the end of the day, if it wasn't for Dennis Kozlowski everything would have been great. Those acquisitions did hold up."
According to documents released by UTC, Diebold was initially contacted about this offer Feb. 19 and rebuffed discussions of a buyout. UTC is now going public because "This transaction creates significant and immediate value for Diebold shareholders with no operational risk, while creating long term value for UTC shareholders," said George David, chairman and CEO of United Technologies, in a statement. "Diebold represents an excellent fit with UTC, with its strong market position, U.S. footprint, and balance between product and service revenues. In addition, Diebold will benefit from UTC's international presence and disciplined operating systems."
"That's about market verticals," said Dan Weiss, chief executive officer at Infrastruct Security, "that's what UTC would potentially be buying, dominance is the closest thing to a regulated segment that isn't regulated."
"Diebold has a long track record in servicing the banking community," Mallon agreed, "and they're well respected with their security products over the years. It's more recently that they've gone into the integration of security systems, and that is to my mind the fit with UTC. UTC has been acquiring integration companies, and Diebold has their integration operation, there's where I think they'll have the good foothold providing the integration services. Both companies are really straddling the lines between products and service, so, which will dominate? Time will tell. I think they will be formidable in the financial services market, but also far beyond that."
For continuing coverage of this story, see the April issue of Security Systems News.