Hedging its bets against an ongoing decline in the market for full-service automated teller machines, Diebold Inc., the largest U.S. ATM manufacturer, is pressing even farther into the electronic voting market.
The North Canton, Ohio, company announced Thursday that it had agreed to buy Global Election Systems Inc., which targets states that want to upgrade from punch cards and other antiquated voting methodologies. The stock-for-stock deal is valued at $32 million to $38 million and is expected to close by September.
In 1999 Diebold acquired a Brazilian voting terminal maker, Procomp Amazonia Industria Electronica. In January 2000 Procomp won the largest contract in Diebold's history, a $105 million deal to outfit all of Brazil with electronic voting terminals.
The electoral debacle last year in Florida further whetted Diebold's appetite for electronic voting equipment. Walden W. O'Dell, Diebold's chairman, chief executive officer, and president, met with Katherine Harris, Florida's secretary of state, after the problems with the state's balloting came to light.
The Global deal "allows us to immediately capitalize on this expanding market rather than undergo the lengthy certification and development process necessary to enter the market with our Brazilian product," Mr. O'Dell said. The Procomp machines would not have been certified by the Federal Election Commission in time to be used in next year's elections, he said.
In acquiring Global, of McKinney, Tex., Diebold would get a company with 10 years' experience in the U.S. electoral market. The deal calls for the buyer to provide $5 million of immediate financing to Global.
It says it is not taking abandoning its bread-and-butter ATM business.
"We're not ready to say that the financial self-service industry is about to dry up in the near future," Diebold spokesman Mike Jacobsen said. "For us as a company, it's important to have other legs our business can stand on."
Diebold is "looking at other emerging markets, be they in the financial industry or outside the financial industry, that complement what we do best in our core expertise in self-service technology," Mr. Jacobsen said.
Diebold would produce more than 500 AccuVote-TS touch-screen voting terminals for Johnson County, Kan., near Kansas City, to fulfill a contract previously secured by Global Election Systems.
Robert J. Urosevich, president and chief operating officer of Global, said the U.S. voting marketplace could generate $1.5 billion to $2 billion of hardware revenue over the next four to five years. His company's equipment is used in 39 states, including Florida.
Global's AccuVote optical scan machine, which is used in 17 Florida counties - though not in Palm Beach, where the butterfly-ballot problems occurred - reads paper ballots on which voters fill in ovals with pencils or pens to mark their choices. "The system allows you to change your mind," Mr. Urosevich said
All balloting equipment in Florida was scrutinized last year, and the AccuVote machines had the lowest percentage of "spoiled" ballots in the state, he said.
Global Election Systems also has machines that are more advanced, including the AccuVote-TS, which uses an interactive touch screen and a smart card to verify the voter's identity and to present the appropriate ballot. "We decided to go with a smart card because it has the storage capacity to handle any data that you want to put on it," Mr. Urosevich said.
The AccuVote-TS, which was piloted in 6,000 Los Angeles precincts last year, lets people vote anywhere, on any ballot station, at any time. The company calls this "convenience voting."
Its only limitations are state and federal election laws, which may not permit the type of self-service voting the company can accommodate, Mr. Urosevich said.
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