UTC withdraws offer for Diebold
HARTFORD, Conn.--In a succinct letter to his counterpart at Diebold, UTC chairman George David said on Monday that UTC is withdrawing its $40-per-share offer to buy Diebold, ending more than six months of strained courtship.
"We have seen Diebold's financial restatements recently filed with the SEC and note that you have scheduled your annual meeting for November 12," David wrote. "In light of your extended refusals of UTC's requests for management discussions and due diligence, we are withdrawing our offer of February 29 to purchase any and all Diebold common shares at $40 per share. We had hoped we could negotiate a transaction that would have created substantial value for both your and our shareholders. It's unfortunate this won't happen."
"They're both good companies," said Sandra Jones, head of M&A advisory firm Sandra Jones & Co., "and I think there would have been a lot of synergies, but it's all about: At what price?"
With Diebold recently releasing long-awaited financial numbers that show $1.5 billion in revenues in the first half of 2008, UTC's offer of just less than $3 billion could be seen as slightly below the standard going rate. However, Diebold's stock price, after hovering near $40 all summer because of UTC's offer, has dropped back down to the $27 range, and the offer still represented a significant premium on the stock price back in February.
Maybe, Jones postulated, UTC wasn't interested in pursuing the deal anymore because of market conditions. Though UTC said at the time of its offer that the deal was not dependent on outside financing, the UTC stock has fallen from the $70 range in March to the $50 range today, reflecting a serious blow to the company's market valuation.
"I can only guess they may have been relieved with a legitimate way to back out," said Jones.