Proposal Represents 66 Percent Premium Over Diebold's Current Trading Price
HARTFORD, Conn., March 2 /PRNewswire-FirstCall/ -- United Technologies
Corporation (NYSE: UTX) today announced that it has made a proposal to the
Board of Directors of Diebold, Incorporated (NYSE: DBD) to acquire all the
outstanding shares of Diebold for $40.00 per share in cash, representing a
total enterprise value of approximately $3.0 billion. UTC's proposal
represents a premium of approximately 66 percent to Diebold's closing stock
price on Feb. 29, 2008. The proposal is not subject to any financing
contingency.
"This transaction creates significant and immediate value for Diebold
shareholders with no operational risk, while creating long term value for
UTC shareholders," said George David, Chairman and CEO of United
Technologies. "Diebold represents an excellent fit with UTC, with its
strong market position, U.S. footprint, and balance between product and
service revenues. In addition, Diebold will benefit from UTC's
international presence and disciplined operating systems."
David added, "In view of the significance of this proposal to Diebold's
shareholders and our own, we feel compelled to release this offer publicly.
We are committed to working with Diebold's Board of Directors to enter
quickly into a definitive agreement."
Given the compelling nature of UTC's proposal and the importance of
allowing Diebold's shareholders to capitalize on the benefits of the
proposed transaction sooner rather than later, UTC has provided the recent
correspondence between UTC and Diebold below:
February 29, 2008
Mr. John N. Lauer
Chairman of the Board
Diebold, Incorporated
Dear Mr. Lauer:
United Technologies (UTC) offers to acquire all of the outstanding
shares of Diebold for $40 per share. This is a 66% premium to Diebold's
current share price and a 45% premium to the three month trailing average.
We have sought for more than two years to engage Diebold in
constructive discussions to increase your shareholder value. Most recently,
I wrote to you on February 19th outlining the benefits to Diebold's
shareowners, employees, and other constituencies of a business combination.
UTC would finance the share acquisitions with current cash balances and
other readily available sources of funds. A UTC shareholder vote is not
required, and we and our counsel do not see regulatory impediments.
We have suggested appropriate due diligence earlier and affirm this
now. Additional value could be identified, and a higher price proposal for
Diebold's shares could result. We are prepared to begin immediately and
believe a definitive agreement can be completed within thirty days.
I am attaching my prior letter outlining the rationale for this
combination. The facts are that UTC has an exceptional global footprint,
deep technical resources, and an outstanding operating record. An
incidental but important fact is that UTC ranks number one on total
shareholder return among the Dow Jones Industrials over the last ten years.
Failing an ability to engage in discussions with Diebold's board and
management, we believe it is in your shareholders' interests to know of
this proposal. Although you directed me in your last letter not to have
further contact with Diebold board members, I am urging a timely response
now while the matter remains confidential.
Sincerely yours,
/s/ George David
George David
cc: Thomas Swidarski, President and Chief Executive Officer
February 21, 2008
Mr. George David
Chairman and Chief Executive Officer
United Technologies Corporation
One Financial Plaza
Hartford, Connecticut 06103
Dear Mr. David:
I have received your letter to me dated February 19, 2008. As you
correctly noted in your letter, 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.
In addition, we respectfully request that, from here forward, neither
you nor any other representative of UTC contact any member of the Diebold
Board.
Sincerely,
/s/ John N. Lauer
John N. Lauer
Chairman of the Board of Directors
Diebold, Incorporated
February 19, 2008
Mr. John N. Lauer
Chairman of the Board
Diebold, Incorporated
Dear Mr. Lauer:
On behalf of United Technologies Corporation ("UTC"), I am pleased to
make a proposal to acquire all of the outstanding shares of Diebold for
cash at a significant premium to the current trading price. As you know,
Morgan Stanley as UTC's advisor has had several conversations with you and
another of Diebold's directors expressing UTC's interest. We have
understood you reviewed this interest at your board meeting last week and
declined to meet with me as suggested by Morgan Stanley.
UTC would use existing cash balances and other readily available
financing. The transaction would not be subject to any financing
contingency or approval by the shareholders of UTC. We and our legal
counsel have reviewed the transaction in light of regulatory requirements
and do not foresee impediments to prompt completion of the transaction.
We believe UTC's resources and presence in markets globally would be
significant assets to Diebold in expanding its business worldwide and
increasing its margins and profitability. UTC's revenues are approximately
$55 billion annually, and the company has 220,000 employees. Significantly,
more than 60% of UTC's revenues arise outside the United States, in
comparison to Diebold's 45%. Employment and local market presence for UTC
are equally diversified, with 66% of employees outside the United States.
UTC is also an exceptionally technology intensive company, with research
and development spending exceeding $3.5 billion annually.
Several UTC businesses have characteristics closely akin to Diebold.
For example, Otis Elevator operates in the U.S. through a network of 400
company owned branch offices and service locations. Like Diebold,
significant portions of Otis' costs and value added, including an extensive
aftermarket business, are incurred in these distributed offices. Carrier
Corporation has comparable business models in its commercial air
conditioning and refrigeration businesses, as does UTC Fire & Security
throughout its businesses.
In addition, UTC has an exceptional operating record, with margins
having tripled over the last 15 years and a total shareholder return
exceeding 1500% over the same period. In short, we believe our shared
experiences with Diebold, in addition to UTC's obvious resources and global
reach, will be highly beneficial to your employees and other constituencies
and warrant the proposed significant premium to your recent share price
trading range.
Although we have reviewed publicly available information on Diebold,
due diligence in the ordinary course will enable us to make a precise and
potentially increased share price offer to your shareholders. We are
prepared to commence this due diligence immediately and would anticipate
completion, including a definitive purchase-and-sale agreement, within
several weeks.
Subject to events as they may develop, we don't currently intend public
disclosure of this proposal.
As previously, I am prepared to meet personally with you at any time.
We ask for a response by next Tuesday, February 26th.
Sincerely yours,
/s/ George David
George David
UTC's proposal is subject to satisfactory completion of due diligence
and customary regulatory approvals. UTC expects that once it reaches a
timely agreement with Diebold's Board of Directors, the proposed
transaction would be completed within 90 days.
United Technologies, based in Hartford, Conn., is a diversified company
that provides high technology products and services to the building and
aerospace industries.
This communication does not constitute an offer, or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval.
Statements in this release that are "forward-looking statements" are based
on current expectations and assumptions that are subject to risks and
uncertainties. All information in this communication is as of March 2,
2008. United Technologies Corporation undertakes no duty to update any
forward- looking statement to conform the statement to future events or to
changes in the company's expectations.
UTC-IR
Contacts:
Peter Murphy, UTC Judith Wilkinson / Eric Brielmann
(860) 728-7977 Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
John Moran, UTC
(860) 728-7062
SOURCE United Technologies Corporation
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Related links:
http://www.utc.com
http://www.prnewswire.com/comp/913919.html /
CONTACT:
Peter Murphy, +1-860-728-7977, John Moran,
+1-860-728-7062, both of UTC; Judith Wilkinson, or, Eric
Brielmann, both of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449
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