Rival Takeover

Wincor and Diebold to Create ATM Giant

  • Why it matters

    Why it matters

    U.S. cash machine maker Diebold will strengthen its stronghold in Europe and become the world’s largest ATM maker after buying German rival Wincor Nixdorf.

  • Facts

    Facts

    • Wincor Nixdorf is the world’s second-largest maker of cash machines and payment terminals by revenue; Diebold is the world’s third-largest maker.
    • The Paderborn-based firm has suffered from a downsizing of Germany’s banking sector, which is marked by oversupply.
    • Wincor Nixdorf, Diebold and market leader NCR have also faced increasing competition from online payment systems, such as PayPal and Apple Pay.
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    Audio

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Wincor Nixdorf has agreed to Diebold's takeover bid. Source: DPA / Bernd Thissen [M]
Wincor Nixdorf has agreed to Diebold's takeover bid. Source: DPA / Bernd Thissen [M]
Wincor Nixdorf has agreed to Diebold’s takeover bid. Source: DPA / Bernd Thissen [M]

 

Wincor Nixdorf, the world’s second-largest maker of cash dispensers based in Paderborn, threw in the towel on Monday, agreeing to a takeover by U.S. rival Diebold, worth €1.7 billion, or $1.8 billion, in a combination of cash and shares.

Faced with a weak German banking market, where branches have been closing and demand for cash machines has fallen, Wincor Nixdorf in April issued a profit warning and announced 1,100 job cuts.

Faced with widespread competition from national, regional cooperative and state-owned banks and a shift to online banking, Germany’s financial institutions have been downsizing for years. Munich-based Hypovereinsbank, a unit of Italy’s Unicredit Bank, is closing down 240 of 580 branches.

Wincor Nixdorf, Diebold and NCR have faced increasing competition from online payment methods such as PayPal and Google Wallet.

Wincor Nixdorf has also suffered from these changes. Germany is its largest market in terms of revenue, making up 23 percent of total sales in the fiscal year, which ended on Sept. 30. German revenue fell 6 percent to €555 million, while total annual sales were down 2 percent to €2.4 billion.

Shares of the German firm fell to a two-and-a-half year low in August at €33.22, making it attractive for Diebold, the world’s number three maker of ATMs and pay terminals, to make a bid and eclipse U.S. rival NCR as the world largest ATM maker by combining with Wincor.

Shares of the German firm have recovered since last month, when speculation of a takeover by Diebold surfaced. The stock was up more than 5 percent on Monday at €48.20 on the Frankfurt Stock Exchange, compared with an offer price of €54.22 euros based on Diebold’s share price and the dollar-euro exchange rate on Friday.

 

Wincor Nixdorf NCR Diebold The Biggest ATM Makers-01

 

Wincor, Diebold and NCR have faced increasing competition from online payment methods such as PayPal and Google Wallet as consumers increasingly buy products online, ignoring cash and ATMs all together.

“The rate of change we see in our industry is unprecedented,” said Diebold’s chief executive, German national Andy Mattes, in a statement. His counterpart at Wincor Nixdorf, Eckard Heidloff, said the combination of the two firms would help “banks and retailers to cope with challenges of digitization.”

In April, Mr. Heidloff accelerated the company’s push to grow in the more profitable development of payment software and service business and reduce the company’s dependence on hardware. But Wincor Nixdorf has lagged behind its rivals NCR and Diebold, which rolled out programs to shift their business several years ago.

By buying Wincor, Diebold will acquire a piece of technology originally developed by Heinz Nixdorf, who founded Nixdorf Computer in 1952. German engineering firm Siemens bought the company in 1990 and sold it again in 1999 to private equity firms Kohlberg Kravis Roberts and Goldman Sachs Capital Partners. Wincor Nixdorf listed on the Frankfurt Stock Exchange in 2004 and has been a member of the German mid-cap MDAX index.

 

Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the author:  kreijger@handelsblatt.com

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