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United Technologies Corp., which has an unsolicited offer on the table for Diebold
Inc., feels ambivalent about buying the ATM manufacturer, George David, United
Technologies chairman, told analysts last Thursday.
He characterized United Technologies as "less likely rather than more likely" to make
the purchase. It was the second such comment by a senior United Technologies' executive in six months.
David led the drive to buy the North Canton, Ohio-based company, when he was
CEO. He retired from that position in April. Louis Chenevert, who succeeded David as
CEO, told analysts in May that United Technologies liked Diebold's model but did
not consider the company "a must have" (ADN,6/5). Chenevert also serves as United
Technologies president.
In March, Hartford, Conn.-based United Technologies offered $40 a share or $2.66 billion for Diebold, the world's third-largest shipper of ATMs based on 2007 figures, according to London-based Retail Banking Research Ltd. Diebold's board rejected United Technologies' offer. Since then, Diebold has
reported better-than-expected preliminary financial results.
The uptick came partly because of improving sales, says Charles E. Ducey Jr., Diebold senior vice president of global development and services. Ducey predicted U.S. ATM sales will grow 6% to 8% in the next three to five years with deposit automation the key driver.
Analyst Gil Luria, vice president of research at Los Angeles-based Wedbush Morgan
Securities Inc., says Diebold deserves a higher offer in light of improved financial results.
In an analyst report, Luria upgraded Diebold's stock to a buy from a hold. "We are
upgrading shares of Diebold to buy from hold as we believe the stand-alone fundamentals of the company justify our $40 price target, even in absence of an offer from United Technologies," Luria wrote.
After David's comments, Diebold's stock price fell 6.1% or $2.27 to $35.22. The decline did not appear to alter Luria's assessment. "We believe the decline in the share price ... following United Technologies' comment that a Diebold deal is less likely is more a reflection of a shifting shareholder base as opposed to a change in Diebold fundamental value," Luria wrote. United Technologies owns 3.5% of Diebold's outstanding stock.
Diebold is scheduled to report its financial results to the U.S. Securities and Exchange Commission later this month, company officials
told analysts during a recent investor conference at the New York Stock Exchange
(ADN, 9/11).
David made his comments at the Morgan Stanley Global Industrials CEOs Unplugged
Conference.
