Update: Diebold rejects UTC's $3B hostile takeover bid

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March 3, 2008 (Computerworld) Diebold Inc., the parent company of e-voting systems vendor Premier Election Solutions, is in the cross-hairs of a hostile acquisition attempt by conglomerate United Technologies Corp.

Earlier today, Hartford, Conn.-based UTC made an offer for Diebold, saying that the e-voting system and ATM manufacturer would tie in well with its businesses.

The UTC offer calls for the acquisition of all Diebold shares at $40 each, or a 66% premium over its Feb. 29 per-share price. If the deal went through, it would be valued at about $3 billion.

"The board strongly believes that UTC's proposal significantly undervalues the company and fails to reflect Diebold's strengths and significant upside potential," Chairman John Lauer said in a statement.

"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 UTC at this time," Lauer said

Earlier in the day, UTC Chairman and CEO George David said that "Diebold represents an excellent fit with UTC, with its strong market position, U.S. footprint and balance between product and service revenues." He also said that Diebold would "benefit from UTC's international presence and disciplined operating systems."

In a Feb. 29 letter to Lauer, David wrote that UTC has made an effort to acquire Diebold for about two years through "constructive discussions" but that the attempts have not been successful.

In a Feb. 21 letter to David, Lauer wrote that "the prior overtures on your behalf to me and another Diebold director were discussed extensively at a regularly scheduled Diebold board meeting last week. After careful consideration, our board unanimously determined at that meeting that it was not in the best interests of the corporation or its shareholders to pursue discussions with UTC regarding a business combination with Diebold. Nothing has changed since that meeting that warrants revisiting this issue."

Diebold has not filed financial statements since filing its 10-Q for the quarter that ended March 31, 2007, and the company is working to get its financial statements current with the U.S. Securities and Exchange Commission.

"We are confident that executing on our strategy will create substantially greater value for shareholders than UTC's proposal, and we are working diligently to complete our filings and ensure that our investors can make a fully informed decision," Lauer said today. "We intend to make the value case to our shareholders directly as soon as we are able."

Last August, Diebold changed the name of its Allen, Texas-based e-voting systems business from Diebold Election Systems to Premier Election Solutions. Diebold is also the parent company of vendors of a wide range of self-service delivery and security products.

Diebold previously tried to sell its electronic-voting subsidiary but in August said that it had failed in its attempt because of controversy surrounding e-voting security.

UTC owns jet-engine maker Pratt & Whitney, helicopter maker Sikorsky Aircraft and elevator manufacturer Otis, among other companies.