Diebold, Incorporated (NYSE:DBD) today sent the following letter to George David, chairman and chief executive officer of United Technologies Corporation ("UTX"), in response to UTX's unsolicited $40 per share offer, which was made public on Sunday, March 2.
Diebold's board of directors on Monday, March 3, unanimously rejected UTX's unsolicited proposal to acquire the company:
Mr. George David
Chairman and Chief Executive Officer
United Technologies Corporation
One Financial Plaza
Hartford, Connecticut 06103
Dear Mr. David:
While our rejection of your unsolicited proposal to acquire Diebold, Incorporated ("Diebold" or the "Company") has been publicly disclosed, I want to take this opportunity to emphasize our position with respect to the Company's long-term strategy and prospects, to reiterate that our focus is on building and delivering value for our shareholders, and to respond directly to mischaracterizations regarding the history of discussions between Diebold and United Technologies Corporation ("UTX").
UTX is opportunistically seeking value that belongs to Diebold shareholders
Your $40.00 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, a U.S. ATM and financial self-service environment that is anticipated to improve in 2009 from recent lows, important opportunities for growth overseas and cost initiatives that are on track to eliminate an initial $100 million from our cost structure by the end of 2008. The Company is also in the process of finalizing additional strategic initiatives that would result in further substantial cost savings. In short, we are confident in the management team's ability to significantly grow margins in the near term and achieve stand-alone value well in excess of your offer.
We are confident that our performance is on a strong upward trajectory. We remain committed to our strategy and believe that our shareholders should be the beneficiaries of this momentum.
No basis for Diebold shareholders to accurately determine appropriate value
As we have clearly stated, given that we are in the process of working to become current in our financial results, there is simply insufficient financial information for investors to assess valuation. Accordingly, we have been unable to provide forward-looking guidance to date. As we have previously reported, the Company is working diligently to complete this process as quickly as possible. Hence, it would be imprudent for us to engage in any change-of-control discussions at this time. We believe that no responsible, objective management team or Board would assert otherwise and have heard from a number of our shareholders in the last few days that share this view.
Our customer relationships are a key component of our value
Diebold was built on a foundation of customer focus and loyalty. We have carefully cultivated our strong brand for nearly 150 years. Our intense focus on the financial industry and our unwavering commitment to customers is evident in all that we do. We are mindful of the potential consequences any action we take could have on our global customers and the communities in which we operate. A loss of confidence in the focus on our industry or stability of our operations could have dramatic and material impact on our growth and profitability.
Misleading characterizations by UTX
We take exception to your assertion that UTX has "sought for more than two years to engage Diebold in constructive discussions." This statement is inaccurate and misleading. Prior to your letter dated February 29, 2008, UTX had never made a firm proposal to acquire Diebold. In fact, UTX 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.
Our focus is on creating value for Diebold shareholders
To be clear, our Directors are -- and have consistently been -- focused on building and delivering value for our shareholders. We are extremely mindful of our fiduciary duties to all shareholders and unanimously committed to the view that your unsolicited and opportunistic $40.00 per share offer is not in their best interests.
Simply put, UTX's 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 Board that discussions now will not likely result in the best outcome for our shareholders.
John N. Lauer
Non-executive Chairman of the Board