Diebold to Announce Official Offer for Wincor Within Days

FRANKFURT—U.S. automated teller machine maker Diebold Inc. is close to formally announce a takeover offer for its German rival Wincor Nixdorf AG of more than €1.7 billion ($1.9 billion), people familiar with the matter said.

The official bid, which likely will come within the next couple of days, is to consist of 80% cash and 20% equity, these people said. Spokespeople for Diebold and Wincor had no immediate comment. The offer is expected to hinge on 75% of Wincor shares being tendered.

Such a binding move would come more than four weeks after Diebold and Wincor announced that they entered into a nonbinding agreement that would combine the industry's No. 2 and No. 3 companies by revenue.

Both said at the time they agreed on a cash-and-share offer that valued Wincor at €52.50 a share on Sept. 24, cautioning that there is no assurance that any binding agreement will be reached.

Because Diebold's share price has risen by about 19% since then, the share component that Wincor investors would receive improves accordingly. Wincor shares closed down 0.4% at €46.08 on Friday.

Investors have said privately the gap between Wincor's share price and Diebold's prospective offer price is because of uncertainty surrounding the deal and a potential withholding tax that affects mixed cash-share offers in Germany.

The Wall Street Journal in October reported that a largely overlooked tax law may substantially hit mixed cash/share offers. People familiar with the Diebold-Wincor transaction said they expect the tax to be a minor threat to this deal, however.

Diebold and Wincor said in October that a combination enables them to sharpen their focus on the growing digital-payments segment and move away from ATMs, for which prices are declining. By joining forces, they could boost investment into the development of software and IT services, which is costly.

A deal would also boost Diebold's European presence, having previously concentrated on North America.

"There is a great geographical fit and the price for Wincor is quite attractive," said analysts from DZ Bank last month.

Diebold, led by former Hewlett-Packard Co. executive Andy W. Mattes, is in the midst of a cost-cutting drive, with revenue having stagnated over the past eight years. It is aiming to cut annual costs by $200 million, while investing $100 million into electronic security, software and IT services through 2017.

Credit Suisse and J.P. Morgan are advising Diebold, while Goldman Sachs is advising Wincor.

Write to Eyk Henning at [e-mail]

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November 20, 2015 14:05 ET (19:05 GMT)

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