"United Technologies is making Diebold an offer it can't refuse." Forbes

From: Edmund R. Kennedy <ekennedyx_at_yahoo_dot_com>
Date: Mon Mar 03 2008 - 14:48:25 CST

Taking a page from The Godfather United Technologies is making Diebold an offer it can't refuse.
Shares of Diebold
    (nyse:
      DBD -
        
       news
     -
    
       people
    ) rocketed 62.1%, or $14.97, to $39.09, in morning trading in reaction to United Technologies
    (nyse:
      UTX -
        
       news
     -
    
       people
    )'
unsolicited offer for $2.6 billion, or $40 per share. United
Technologies, which made the announcement late-Sunday, said the total
value of the deal totals approximately $3.0 billion with the assumption
of $324.8 million of long-term debt. (See: "UTC Bids $3B To Take Diebold Abroad")
United
Technologies, parent company of jet engine-maker Pratt & Whitney,
Otis elevator and Sikorsky Aircraft, said it made the unsolicited offer
after trying to negotiate a deal with Diebold for two years. Diebold,
based in Canton, OH, makes ATMs, business security systems and voting
machines.
Diebold has rejected United Technologies' overtures,
even formally asking that the company not contact a member of Diebold's
board. So, United Technologies took it to Diebold's shareholders with a
65.8% premium to Friday's closing price of $24.12.
"I think
it's a nice premium to where the stock is now," said Gil Luria, an
analyst at Wedbush Morgan, "but Diebold has been struggling of late so
I would consider profits and multiples at trough levels."
Despite
the reluctance of Diebold's management, Luria believes that United
Technologies will ultimately prevail. "Given the size, Diebold's board
will consider it, and also look at other offers," Luria said, "but at
the end of the day United is very interested and the most likely
candidate to do the deal."
Diebold's stock has been bleeding
value since the summer, when it was trading above $54. The company's
problem has been an investigation by the U.S. Securities and Exchange
Commission into Diebold's accounting for orders of automated-teller
machines.
In United Technologies' view though, the drop in price is a point of convenience.
"The
deal for United Technologies is really based on the fact that Diebold
was more profitable in the past, and United believes it can make it
profitable again," Luria said.
Luria added that the acquisition
would provide the company an opportunity to diversify into the
financial services industry when it's cheap as a result of the
prevailing negative market sentiment.
 

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Received on Mon Mar 31 23:17:01 2008

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