IMGCAP(1)]
After dropping hints for months, United Technologies Corp. made it official
Monday, formally withdrawing its $2.66 billion, $40 per share, unsolicited offer for
Diebold Inc., the world's third-largest ATM manufacturer based on 2007 shipments.
The company dropped its bid becauseDiebold's board repeatedly refused to meet
with United Technologies, George David, United Technologies' chairman, said in a statement. "In light of extended refusals of UTC's [United Technologies'] 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. We had hoped we could negotiate a transaction that would have created substantial value for both your and our shareholders. It's unfortunate that won't happen," David wrote to John N. Lauer, Diebold's chairman, in a one-paragraph letter dated Oct. 13
Lauer, however, had another take on United Technologies' decision to withdraw its offer. "The Diebold board of directors remains confident that the company is on the right path and is encouraged by the continued improvement it has seen in the company's strategic initiatives to gain cost efficiencies and increase profitability," Lauer said in a statement. "This gives the board confidence that Diebold is on
course for creating substantial shareholder value for its investors, despite current global financial market conditions."
In September, Diebold became current with its U.S. Securities and Exchange
Commission filings. Diebold filed its 10-K form for 2007 with SEC quarterly reports on Form 10-Q for the quarters ended June 30, 2007; Sept. 30, 2007; March 31 and June 30 of this year. Sales for 2007 totaled $2.97 billion, up 1.4% from $2.94 billion a year earlier.
In becoming current, Diebold raised its full-year 2008 guidance to $1.52 to $1.62 per share from $1.37 to $1.47 per share (ADN, 10/2).
Thomas W. Swidarski, Diebold president and CEO, said in a statement the company's long-term strategies, in place since 2006 to save on expenses and to sell more products, are beginning to payoff.
"We are now seeing the tangible results of these efforts," Swidarski said.
United Technologies' decision to drop its bid is not a surprise. United Technologies
president and CEO, Louis Chenevert, said in June the company might withdraw its offer for Diebold (ADN, 6/5). Last month, David said, "United Technologies was less likely rather more likely to make the [Diebold] purchase." (ADN, 9/18)
United Technologies' quest for Diebold began earlier this year. In February, Diebold
disclosed it received an offer from United Technologies to buy all of Diebold's 66.5 million outstanding shares (ADN, 3/6). Although United Technologies said the $40-
per-share offer represented a 66% premium on Diebold's closing stock price–at that time $24.12 per share–Diebold's board rejected the offer, saying it "significantly undervalues the company and fails to reflect Diebold's strengths and significant upside potential."
Late today, Diebold stock was trading at $25.43 per share. At the time of the offer,
Diebold had not reported its preliminary first- and second-quarter financials. The
reports were preliminary because Diebold had not filed them with the SEC.
After Diebold released its preliminary first and second- quarter results, Gil Luria, an analyst with Wedbush Morgan Securities in Los Angeles, wrote that Diebold deserved a higher bid from United Technologies because of Diebold's better- than-expected financial results. (ADN, 4/3).
Although United Technologies dropped its bid, the company remains one of
Diebold's largest shareholders, owning 3.5% of its outstanding stock, or 2.3 million outstanding shares (ADN, 4/3). The company could benefit from Diebold's announced plans to buy back some of its shares. In a recent analyst report, Luria said he believes Diebold will begin its share buyback as early as November.
