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Proposed Takeover

UTC Ends Bid To Buy Diebold

United Technologies Corp. has ended its quest to acquire Diebold Inc., the Ohio-based maker of ATMs, voting machines and security equipment — for now, at least.

In a letter to Diebold released Monday, UTC Chairman George David said UTC was withdrawing its offer of $40 a share, which valued Diebold at about $2.6 billion.

Diebold had rejected that offer, after which UTC executives began saying they did not consider Diebold a "must-have." The companies had been at a stalemate for months.

"We had hoped we could negotiate a transaction that would have created substantial value for both your and our shareholders," David wrote to Diebold's chairman, John N. Lauer. "It's unfortunate that won't happen."

David said that UTC studied recent revisions of Diebold's financial statements, but he did not say whether that played a role in the decision. David said Diebold's refusal to open its books was a factor.

Last month, David told investment analysts that UTC would spend less than its customary $2 billion a year on acquisitions this year and spend more on buying back shares.

A UTC spokesman declined to comment further about the Diebold deal, saying the company's announcement "speaks for itself."

Diebold released a statement acknowledging UTC's letter but offered no comment. Recent Diebold initiatives give its board "confidence that Diebold is on course for creating substantial shareholder value for its investors, despite current global financial market conditions," the statement said.

Shares of UTC rose 14 percent Monday, closing at $54.13 in regular trading. Diebold shares rose 1 percent, closing at $28.69.

Investment analysts who follow UTC said they were not surprised by UTC's move, given Diebold's reluctance.

But Richard Tortoriello, an equity analyst with Standard & Poor's, said UTC might not be done with Diebold.

"I'm sure that it's strategic," he said of UTC's publication of its letter. "I'm sure that UTC would like Diebold's shareholders to kind of force Diebold's hand in a certain sense. I don't know exactly how. ... On the other hand, I'm taking UTC's word that, for now, at least, it's giving up on its bid."

UTC is scheduled to report third-quarter earnings Thursday.

On Sept. 30, Diebold filed a late 2007 annual report with securities regulators. It also filed revised quarterly reports for the second and third quarters of 2007 and the first two quarters of 2008. Securities Exchange Commission and Justice Department investigations of Diebold's accounting practices remain open.

Related topic galleries: Ohio, Diebold Incorporated, Annual Reports, United Technologies Corporation, George David

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