"There is only one boss. The customer."
Diebold to acquire Wincor Nixdorf
- Transaction Size: $1.8 billion
- Implied EV/LTM Revenue: 0.76x
- Implied EB/LTM EBITDA: 12.6x
- After announcing it had entered into a term sheet to acquire European rival Wincor Nixdorf earlier this quarter, Diebold, the U.S. maker of ATMs and financial software, has launched a cash and share offer valuing Wincor at $1.8 billion, including debt.
Diebold would pay €39.98 in cash and 0.434 Diebold shares for each share of Wincor, which is equivalent to €52.50 per share and a 35% premium over Wincor’s closing price when the deal was first announced in mid-October.
This deal would combine the global #2 and #3 ATM makers to surpass current market leader NCR, which announced a minority investment from Blackstone earlier this month. The combined entity, which will go by the name Diebold Nixdorf, will have $5.2 billion in revenue.
A Move Towards Services
Staying on Plan: Faced with deteriorating margins and operational deficiencies, then newly hired Diebold CEO Andy Mattes unveiled a multiyear turnaround plan dubbed Diebold 2.0 in late 2013. A major component of the turnaround strategy was the increased emphasis on providing tech-enabled services in the form of professional services, maintenance, and managed services. Andy Mattes reaffirms the company’s commitment to further develop its services offering with this transaction in the press release: “Our new company will be well positioned for growth in high-value services and software – particularly in the areas of managed services, branch automation, mobile and omnichannel solutions.”
Geographically Attractive: With a strong foothold in Europe and a meaningful presence in Asia, Wincor gives Diebold access to a global channel through which it can sell its higher end services. The transaction gives the combined entity an installed base of nearly one million ATMs, as well as a significant client base that relies on Wincor’s retail solutions.
Significant Cost Savings: Finding themselves in an increasingly cash-less world and directly affected by weakness in the global retail banking market, both Diebold and Wincor struggled with negative year-over-year EBITDA growth of -11% and -20% respectively in their 2015 fiscal years. The deal is expected to curtail the drop in operating income by yielding at least $160 million in annual cost savings.
For more information about this transaction, click here to read the press release.