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By Jim Mackinnon/Beacon Journal business writer
POSTED: 11:40 a.m. EST, Mar 05, 2008
Diebold Inc. this morning released a letter from its chairman to United Technologies that calls the Connecticut company's $40-a-share buyout offer ''opportunistic'' and ''inadequate.''
The letter also said that United Technologies has mischaracterized the history of discussions between the two companies and that the company previously had never made a firm offer for Diebold.
Diversified conglomerate United Technologies on Sunday revealed that it was offering $2.6 billion, or $40 a share, for Diebold, the Green maker of automated teller machines and electronic voting machines. The disclosure sent Diebold stock soaring up 61 percent on Monday from Friday's closing price of $24.12.
But Diebold quickly responded Monday that it had rejected United Technologies offer.
Wednesday's letter clarified Diebold's position.
''Your $40-per-share offer is 27 percent below Diebold's 52-week high of $54.50 reached only seven months ago. Moreover, your offer is an opportunistic attempt to acquire Diebold at an inadequate price that does not reflect significant progress against our current strategic initiatives,'' Diebold Chairman John N. Lauer wrote. ''Simply put, (United Technologies') proposed offer is far below what Diebold is worth. Furthermore, your overture, which comes at a time when we cannot responsibly engage in discussions, and the hostile nature of your approach, has convinced the (Diebold) board that discussions now will not likely result in the best outcome for our shareholders.''
The letter said that because Diebold is in the process of revamping its financial statements (as part of an SEC investigation into former accounting practices), shareholders have no basis on which to evaluate the United Technologies bid.
Lauer's letter also said United Technologies mischaracterized contact between the two companies over the past two years.
''Prior to your letter dated February 29, 2008, (United Technologies) had never made a firm proposal to acquire Diebold,'' Lauer wrote. ''In fact, (United Technologies) approached Diebold on only two occasions with non-specific inquiries — first a brief, informal conversation that took place roughly two years ago between an investment banker (who did not identify his client) and a Diebold board member; and second, your letter dated February 19, 2008, which referenced a vague proposal without any specific price. Two points of contact separated by two years does not, in our opinion, represent 'constructive discussions to increase shareholder value' as you have publicly stated.''
Diebold shares were up 18 cents to $37.86 as of 11:03 a.m.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
Diebold Inc. this morning released a letter from its chairman to United Technologies that calls the Connecticut company's $40-a-share buyout offer ''opportunistic'' and ''inadequate.''
The letter also said that United Technologies has mischaracterized the history of discussions between the two companies and that the company previously had never made a firm offer for Diebold.
Diversified conglomerate United Technologies on Sunday revealed that it was offering $2.6 billion, or $40 a share, for Diebold, the Green maker of automated teller machines and electronic voting machines. The disclosure sent Diebold stock soaring up 61 percent on Monday from Friday's closing price of $24.12.
But Diebold quickly responded Monday that it had rejected United Technologies offer.
Wednesday's letter clarified Diebold's position.
''Your $40-per-share offer is 27 percent below Diebold's 52-week high of $54.50 reached only seven months ago. Moreover, your offer is an opportunistic attempt to acquire Diebold at an inadequate price that does not reflect significant progress against our current strategic initiatives,'' Diebold Chairman John N. Lauer wrote. ''Simply put, (United Technologies') proposed offer is far below what Diebold is worth. Furthermore, your overture, which comes at a time when we cannot responsibly engage in discussions, and the hostile nature of your approach, has convinced the (Diebold) board that discussions now will not likely result in the best outcome for our shareholders.''
The letter said that because Diebold is in the process of revamping its financial statements (as part of an SEC investigation into former accounting practices), shareholders have no basis on which to evaluate the United Technologies bid.
Lauer's letter also said United Technologies mischaracterized contact between the two companies over the past two years.
''Prior to your letter dated February 29, 2008, (United Technologies) had never made a firm proposal to acquire Diebold,'' Lauer wrote. ''In fact, (United Technologies) approached Diebold on only two occasions with non-specific inquiries — first a brief, informal conversation that took place roughly two years ago between an investment banker (who did not identify his client) and a Diebold board member; and second, your letter dated February 19, 2008, which referenced a vague proposal without any specific price. Two points of contact separated by two years does not, in our opinion, represent 'constructive discussions to increase shareholder value' as you have publicly stated.''
Diebold shares were up 18 cents to $37.86 as of 11:03 a.m.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
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