Is Diebold about to acquire Wincor Nixdorf for $1.8 billion?

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According to multiple news sources, financial self-service manufacturer Diebold is in talks with German ATM maker Wincor Nixdorf over a potential takeover. The deal would value Diebold at nearly $2 billion as it looks to move into the digital payments space.

 

Non-binding agreement

On October 17th Diebold revealed that they have entered into a non-binding term sheet agreement with Nixdorf as they thrash out the details regarding a potential business combination.

Diebold is rumoured to have offered Wincor €1.57 billion ($1.8 billion).

Both firms are well respected in the ATM manufacturing industry, with Diebold and Wincor the 2nd and 3rd highest grossing firms in their fields.

If a takeover does happen, it will involve a cash-and-share deal with Wincor being valued at €52.50 a share. The acquisition would value Diebold at approximately $1.9 billion.

 

Why is this deal happening?

There are many reasons as to why Diebold is interested in buying out Wincor, the main being a move into the digital payments sector.

By purchasing Wincor, Diebold can use Wincor’s technology to develop new software and IT services, as well as adding to its 16,000 employee base.

Both Diebold and Wincor concede that mobile payments are the future, with ATM usage expecting to decrease in the next few years.

‘‘The trend towards digitization embraced by both banks and retailers has added to the momentum of change, with software and high-end service solutions playing a prominent role and opening up opportunities for growth at Wincor Nixdorf,’’ explained Eckard Heidloff, Chief Executive of Wincor back in April.

In the UK however, cash machines will still play a large role in the future, with Payments UK predicting that British consumers will make 2.5 billion ATM withdrawals in 2024.

 

International expansion

The acquisition will also give US-based Diebold an opportunity to expand into European markets, with the continent responsible for just 15 per cent of Diebold’s revenue. Paderborn-based Nixorf generates 70 per cent of its revenue in Europe, which is approximately €2.47 billion a year.

‘‘This planned transaction makes sense,’’ said DZ Bank analyst Harald Schnitzer, who added that Nixorf ‘‘has a dominant presence in Europe whereas Diebold’s main strengths are in the United States.’’

According to Bloomberg, this will be the largest acquisition in Diebold’s history, topping the $225m takeover of Diebold Procomp in 1999.

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