UTC makes $3bn bid for ATM maker Diebold

United Technologies Corporation announced Sunday an unsolicited $2.63 billion bid to acquire Diebold Inc., the world-renowned maker of automated tellers and voting machines, taking its bid public after Diebold's board declined to discuss a combination for two years.

United Technologies, the maker of Otis elevators and Chubb security systems that first approached Diebold two years ago, said yesterday that it has made an offer to the board of Diebold to buy company’s all 66 million shares for about $40 in cash, which represents a 65.8% premium to Diebold's Friday (Feb. 29, 2008) closing price of $24.12.

Including the assumption of $324.8 million of long-term debt, that values the company at $3.0 billion.

The board of North Canton, Ohio-based Diebold last declined to discuss a buyout on Feb. 21.

In a Feb. 19 letter to Diebold, UTC Chief Executive George David expressed their interest in the company, saying UTC was prepared to pay a "significant premium" for Diebold.

"We believe UTC's resources and presence in markets globally would be significant assets to Diebold in expanding its business worldwide and increasing its margins and profitability," the letter read.

In response Diebold released a letter on Feb. 21, saying the company’s board had rejected any possible combination. "In addition, we respectfully request that, from here forward, neither you nor any other representative of UTC contact any member of the Diebold board," Diebold Chairman John N. Lauer said in the letter.

James E. Geisler, United Technologies’ vice president for finance and the head of its mergers and acquisitions team, said Sunday that a higher offer is possible if the Diebold board agrees to a discussion.

“We think this is very friendly to Diebold's shareholders and the most encouraging thing would be for Diebold to sit down with us,” Geisler said. “We have many options in front of us, but we are most hopeful we can have a dialogue with them.”

Founded in 1859, Diebold makes automatic teller machines, security systems and other computer hardware that UTC has strongly desired. The company faced severe criticism in 2004, when it provided flawed electronic voting machines for the elections in Ohio and elsewhere.

Diebold recently struggled with a variety of problems, both internal and external. Lat month, the company said it plans to cut about 800 jobs or 5% of its global work force to reduce costs.
In January, Diebold said it would restate four years of results, from 2003 through the first quarter of 2007, to change how it recognizes revenue following discussions with the SEC.

Incorporated in Delaware in 1934, UTC provides high technology products and services to the building systems and aerospace industries worldwide. UTC’s operating units include businesses with operations throughout the world and the company conducts its business through six principal segments: Otis, Carrier, UTC Fire & Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky.