Maker of Otis elevators and Chubb security systems, United Technologies Corp. (NYSE: UTX), announced Sunday that it had made an unsolicited $2.63 billion offer for Diebold Inc. (NYSE: DBD). Diebold is one of the largest makers of automated teller machines and voting machines, and United Tech's move comes as a part of its plan to extend its security business and presence in China.United Technologies announced it first approached Diebold about a possible deal two years ago but nothing had materialized thus far. United Tech announced that its current bid amounts to $40 a share, a 66% premium to Diebold's closing price of $24.12 on Friday. The company also said a it may increase its offer if it is sees more detailed information.
George David, United Technologies' chairman and chief executive, stated that the "transaction creates significant and immediate value for Diebold shareholders with no operational risk, while creating long term value for UTC shareholders."
After reporting 13% profit growth in 2007, United Technologies now sees Diebold as a good opportunity to expand its electronic security business. A big part of the company's revenue came from China where United Technologies benefits from strong productivity and more efficient sales.
Diebold announced last month it would slash 800 jobs to reduce costs in North America and Brazil. Its decision came after the company revealed a plan last year aiming to save $100 million. Diebold would also review manufacturing and storage facilities in North and South America as it has to face a sharp decline in revenue.
Shares of UTX are down $1.70, or 2.4%, to $68.81 in early trading. To ease investors' worries, the company reaffirmed its 2008 expectations. The company, which is offering $40 per share for Diebold, still expects 2008 earnings in the range of $4.65 and $4.85 per share, below analysts' predictions for a profit of $4.86 per share.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
New Facebook share structure hints at IPO
Before the bell: Futures higher ahead of housing, jobless data
Nuclear power is on the comeback trail
