Diebold’s $2B Bid For ATM Maker Wincor

Diebold, the automated teller machine company based in the United States, is in discussions to buy Wincor Nixdorf AG, the German ATM firm, in a deal that could be worth as much as $1.9 billion.

The Wall Street Journal reported Saturday (Oct. 17) that Diebold, the second-largest company in the ATM space, and Wincor, the third-largest, as measured by revenues, have entered into a nonbinding agreement valuing the latter at €52.50 a share as of Sept. 24 in a cash and stock transaction.

Should the deal be consummated, reported WSJ, the combination would allow both companies to push farther into the digital payments sector, with less reliance on hardware, which has been marked by declining prices. And both companies would be able to step up software and IT development, in addition to giving Diebold greater presence beyond the United States, particularly in Europe.

Looking at each company individually, Diebold is focused on cost-cutting as a way to grow earnings, as its revenue growth has stalled. The goal stated by the company is to cut its annual expenses by as much as $200 million, with $100 million earmarked for security, software and services through the next two years.

Wincor seems to be following a similar strategy, with announcements that it would rely less on ATM manufacturing and sales and make a renewed attack on software and IT services, which, WSJ noted, now encompasses 59 percent of its top line.

In a statement made in April, Wincor CEO Eckard Heidloff said that “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.”

Separately, a sell-side analyst, UBS’ Sven Weier, said earlier in October that amid mobile payments growth, usage of cash as physical currency and ATMs have been under scrutiny. “The market seems to be afraid of structural challenges from cashless payments,” the analyst wrote in a note. Diebold has said that it expects cash usage to continue to grow 3 percent a year through 2020. Weier said that he foresees “pent-up demand in Western European banking, as the installed ATM base is over 10 years old, [coinciding] with the need to spend on branch transformation.”

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