CLEVELAND_United Technologies Corp. on Monday dropped its unsolicited $2.6 billion bid to buy ATM manufacturer Diebold Inc., which had frustrated UTC because it wouldn't discuss the offer and delayed releasing its financial information.
Diebold's chairman said the company is encouraged about its future, even as its stock remained far less than UTC had offered.
United Technologies, which owns Sikorsky Aircraft, Otis elevator and other businesses, made its offer in February in an effort to broaden its security business and expand into China. Diebold rejected the offer immediately.
"In light of your extended refusals of UTC's requests for management discussions and due diligence, we are withdrawing our offer of Feb. 29 to purchase any and all Diebold common shares at $40 per share," George David, chairman of United Technologies, told Diebold Chairman John Lauer in a letter Monday.
"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," David said.
Shares of Hartford, Connecticut-based United Technologies rose $6.50, or 13.7 percent, to $54.13. Diebold rose 41 cents, or 1.5 percent, to $28.69.
On Sept. 30, Diebold became current with delinquent financial reports the Securities and Exchange Commission requires.
Lauer issued a statement that talked about Diebold's future but that didn't specifically refer to UTC's decision. He said the Diebold is confident that its shareholders will eventually benefit from "strategic initiatives to gain cost efficiencies and increase profitability." The company is trying to achieve a three-year, $100 million reduction in costs by the end of this year.
Diebold, based in North Canton, about 60 miles (100 kilometers) south of Cleveland, also Monday reiterated guidance for 2008 earnings in a range of $1.52 to $1.62, despite ongoing turmoil in the financial industry.
The bid for Diebold was the final acquisition attempt by David, who was chief executive at United Technologies until he retired in April.
However, the bid stalled. David told investor analysts at a conference last month that the deal was "probably less likely rather than more likely."
In May, United Technologies Chief Executive Officer Louis Chenevert told analysts that Diebold was not a "must have."
In March, however, United Technologies said the acquisition fit well into United Technologies' fire and segment unit.
Until August, Diebold had not issued financial statements for several months and was investigated by the Justice Department and securities regulators over its accounting practices, specifically how revenue is reported. The company has said it resolved the review of how it recognizes revenue and changed an accounting practice.
Diebold's second-quarter 2008 profit rose 37 percent to $27.2 million, or 41 cents per share, versus a profit of $19.8 million, or 30 cents per share, for the second quarter of 2007.
The New York Stock Exchange had warned Diebold's listing could be removed if it's financial reporting continued to be delayed.
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