Diebold rejects UTC's takeover bid

Diebold Inc., the world-renowned maker of automated tellers and voting machines, on Monday rejected an unsolicited $3.0 billion takeover bid from United Technologies Corp., the maker of Otis elevators and Chubb security systems, citing the offer inadequate.

Diebold said UTC’s buyout offer significantly undervalued the company's potential, and comes at the wrong time because shareholders don't have enough data to measure its value.

"The board strongly believes that UTC's proposal significantly undervalues the company and fails to reflect Diebold's strengths and significant upside potential," said John N. Lauer, Diebold's chairman. "UTC's proposal is an opportunistic attempt to buy Diebold at a time when shareholders do not have sufficient data to evaluate the offer and as such, the board believes that it would be irresponsible to engage in discussions with U.T.C. at this time.”

On Sunday (March, 2), United Technologies Corporation made an unsolicited $2.63 billion bid to acquire Diebold, taking its bid public after Diebold's board declined to discuss a combination for two years.

United Technologies, parent company of jet engine-maker Pratt & Whitney, Otis elevator and Sikorsky Aircraft that first approached Diebold two years ago, said at the time 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 represented 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, the offer had valued the company at $3.0 billion.

Before this, the Diebold board declined to discuss a buyout with UTC on Feb. 21, formally asking that the company not contact a member of Diebold's board.

According to UTC spokesman Peter Murphy, the company is disappointed by Diebold's board's response and “we presume their shareholders are as well."

Diebold has not filed financial statements with the Securities and Exchange Commission since March 31, 2007 because of an ongoing accounting investigation by the SEC.

Founded in 1859, Diebold makes automatic teller machines, security systems and other computer hardware. The company is also known for its electronic voting machines. Diebold drew widespread criticism in 2004, when it provided flawed electronic voting machines for the elections in Ohio and elsewhere.

Diebold recently struggled with a series of internal and external problems. Last 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.

Shares of Diebold rose $14.49 or 60.1% to $38.61 a share in afternoon trading, while stock in UTC plunged $1.11, or 1.6 %, to $69.40 a share.