United Technologies Offers $2.63B in Hostile Bid for Diebold

HARTFORD, Conn. — Diebold Inc. is the public target of an unsolicited takeover by United Technologies Corp. (UTC), which is offering $2.63 billion for the electronic security integrator and manufacturer. UTC took its bid public March 2 after Diebold officials declined to discuss a merger for more than two years.

UTC is offering $40 a share, a 66-percent premium to Diebold’s share price on Feb. 29 of $24.12. Diebold’s board has refused to discuss a buyout, saying the price was too low. In a letter to UTC CEO George David, Diebold chairman John Lauer wrote the offer was 27 percent below Diebold’s 52-week high of $54.50 just seven months back. In late March, UTC disclosed a 3.5-percent stake in Diebold or roughly 2.28 million shares.

Diebold was notified it could be delisted from the New York Stock Exchange for not filing its earnings reports since 2007, while it reviews its accounting practices. Conley Turner, an analyst with Wall Street Strategies Inc., detailed in a research report published March 11 the offer “will be difficult to reject despite management’s assertion that it undervalues the company’s potential growth.”

Because both companies focus on similar markets in the electronic security industry, a Diebold acquisition would create a good deal of synergies, according to Sandra Jones, founder of the consulting firm Sandra Jones and Co. “They are both very well positioned,” Jones tells SSI. “Together they would be a source to be reckoned with in this market.”

The unsolicited bid is the latest by David to expand the company’s fledgling UTC Fire & Security business through acquisitions. “This transaction creates significant and immediate value for Diebold shareholders with no operational risk, while creating long-term value for UTC shareholders,” David said in a news release.

UTC has in the past few years bought Lenel Systems Int’l Inc., a security systems and software developer; Chubb, a fire safety and security services business; and Kidde, a British fire and safety company.

About 25 percent of Diebold’s revenue last year came from its security business. The acquisition would thrust UTC into some new lines of business, such as ATMs and voting machines.

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