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.
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