Nov. 25--Diebold Inc. worked hard to woo German ATM maker Wincor Nixdorf.
For now the two companies are, in the words of Diebold Chief Executive Officer Andy Mattes, "frenemies." In the last two years, the companies started collaborating in some areas while also remaining strong competitors.
Mattes saw where joining made sense for both businesses. For one, there was little global geographic overlapping of each company's top markets for automated teller machines and related technologies.
So, Mattes said, "I popped the question."
Wincor Nixdorf's leadership said yes this summer, setting in motion a series of events that led to Monday's official announcement that Green-based Diebold will buy Wincor Nixdorf for $1.8 billion, including debt, with the deal expected to close next year.
Frenemies no longer, the newly combined company, to be renamed Diebold Nixdorf, will keep its corporate headquarters in Green and its status as an Ohio-registered company, Mattes said during part of a wide-ranging interview this week with local media. He noted that he moved his family to Ohio several months ago.
Diebold Nixdorf will have an estimated $5.2 billion in annual revenue, putting it in reach of being listed on the Fortune 500 of the world's largest corporations, Mattes said. Both companies have annual revenue of about $2.6 billion.
"This is good for us. This is good for Ohio," Mattes said. "We're driving our own destiny in an industry that is changing."
The German-born Mattes called the upcoming merger transformational for both companies and also for the industry. It's the largest deal in the more than 150-year history of Diebold. Mattes, a former Hewlett-Packard and Siemens executive, was hired as Diebold's CEO in 2013, succeeding Thomas Swidwarski who was fired in January that year in part because the company missed earnings targets and in part because Diebold was transforming too slowly into a software-focused business.
Mattes said he is excited about what's to come.
"It's a consolidation and combination of two companies that fit extremely well together," Mattes said. "They're very complementary, nearly like two pieces of a jigsaw puzzle with Diebold being very strong in the Americas, Wincor Nixdorf being very strong in Europe."
The two companies have great product portfolios, he said, with the merger also serving Diebold's efforts to become a services-led, software-enabled company. After the merger, the company will get about 56 percent of revenue from services and software, with 44 percent from hardware -- Diebold's long-term goal is to get 60 percent of revenue from software and services.
Among the merger benefits will be $160 million in annual cost savings, Mattes said.
The annual dividend will be cut from $1.15 a share to about 40 cents per share, with money diverted to pay down debt over the next several years, Mattes said.
In addition to expected improvements in profitability, the deal "extends the runway for many years to come and it gives us a great springboard for innovation and growth," he said.
The two companies started working together fairly recently, with Diebold supplying some components for Wincor Nixdorf ATMs and included creating the ATM Security Association.
"We developed quite a good working relationship," Mattes said. "Over time, we developed more respect, more understanding for each other. And then we started talks on and off. Just like in real life, it takes a few tries until you get to the point. We got really serious about the conversations in summer of this year. And then spent a lot of time working on what is called a business combination agreement. ... Think about it as a playbook or road map of how we want to run our company once the deal gets consummated."
It covers such things as management philosophy and raises confidence that the merger will achieve the goals sought, he said.
"Of course, we went through a very lengthy diligence process," Mattes said. "You really want to make sure you fully appreciate what each side has."
Mattes said he has worked on other mergers and acquisitions in his decades-long corporate career. Probably 99 percent of the work to complete the merger remains to be done, he said.
The larger Diebold Nixdorf will be better poised to participate in the ongoing changes in financial services and banking, such as increased branch automation, mobile payments and retail markets, Mattes said. Diebold Nixdorf's competitors won't be so much other ATM manufacturers but well-known information technology firms in what is a $60 billion a year market, he said.
Diebold is now in the middle of the "walk" phase of the "crawl, walk, run" plan to transform into what Mattes has termed "Diebold 2.0".
The Diebold-Wincor Nixdorf merger amounts to a "doubling down" on what they know so well, Mattes said. "We clearly want to be the powerhouse in these industries."
Jim Mackinnon can be reached at 330-996-3544 or email@example.com. Follow him @JimMackinnonABJ on Twitter or www.facebook.com/JimMackinnonABJ. His stories can be found at www.ohio.com/writers/jim-mackinnon.
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