Diebold Offer to Buy Wincor Nixdorf for $2B Underscores Shift in ATM Business Landscape

Today U.S. ATM maker Diebold in an official press release announced to be in discussions to buy Wincor Nixdorf AG in a deal that would value the German company at more than $1.9 billion. Diebold is offering $59.58 per share in cash and stock. This news underscores shift in ATM business landscape.

Wincor Nixdorf is one of the three leading suppliers worldwide and number one in Europe in programmable ePOS systems, as measured by dispatch volumes. Even while being the largest ATM maker in Europe, the company has a negative financial performance. The latest 9-month interim report on financial performance of Wincor Nixdorf as of October 1st, 2015 demonstrated that the company experiences losses on its main accounts.

Business performance after the first nine months is marked by substantial declines in net Hardware Sales – Growth in Software/Services. Net sales of the company went down by 2%. Operating profit (EBITA) after restructuring expenses went down by 57% and Profit for the period went down by 59%. As for regional performance, it went down 5% throughout Americas and 3% in Europe (Germany was down by 6%).

Declines in financial performance even with leading positions in the market signifies the shift in the industry from hardware to software/services. The substantial decline of 12% on net sales of hardware and 6% growth in net sales of software and services proves the market trend. Retail segment shifting towards mobile/online payments is indicated in the significant downturn of 7% in net sales for the retail segment.

While Wincor still has a strong presence in Europe, Diebold's main operations are in the United States, and the companies therefore expect few if any issues with antitrust regulators. The due diligence has yet to be completed by the companies. However, there can be no assurance that any binding agreement will be reached at the above mentioned terms, or at all as stated in the press release.

Being one of the leading ATM makers and payment solutions providers in the market, Diebold’s revenue in the last fiscal year indicated that growth in the revenue share came from services (54%) vs. product sales (46%). Contrary to the negative financial results of Wincor Nixdorf, Diebold ended 2014 with almost $1B in profit.

Diebold will not comment further on any potential combination until a binding agreement is reached or the discussions are terminated, as stated in the press release.