By Arno Schuetze
FRANKFURT (Reuters) - U.S. automated teller machine maker Diebold Inc (N:DBD) has offered to buy rival Wincor Nixdorf AG (DE:WING) of Germany for 1.7 billion euros (£1.2 billion), the companies said on Saturday.
Diebold is offering 52.50 euros per share in cash and stock, a 35 percent premium to Wincor's closing price on Friday. The companies said they had agreed on a potential strategic combination to be implemented through a public tender offer for all Wincor shares.
Reuters reported in April that Wincor had asked investment banks to come up with ideas to secure its future, including a potential sale of the company, and in June reported that Wincor was in talks with Diebold.
The group slumped to an operating loss in its fiscal third quarter, and is in the process of cutting jobs in response to a weak retail banking market in Germany, a deteriorating business environment in Russia and China, a sluggish recovery in European investment spending, and falling prices for ATMs.
The rise of online banking and e-commerce poses a challenge to the likes of Wincor, which have been struggling with low capital investment by banks eager to keep costs in check while still battling the lingering effects of the financial crisis.
According to two people familiar with the deal, final terms may be hammered out within the next two weeks. The 52.50 euros a share offer price will not be changed, while the amount of stock Wincor shareholders will get is dependent on moves in Diebold's share price, the people said.
MOSTLY CASH
The offer will consist mainly of cash, the people said, declining to specify the precise split.
Wincor is the third-largest maker of ATMs behind leader NCR Corp (N:NCR) and Diebold, which, with a market capitalisation of $2.2 billion, has roughly the same market share as Wincor.
The industry is consolidating. NCR received a takeover approach from Blackstone (N:BX) this summer, although the private equity firm has so far not been able to reach a deal to acquire NCR or find a partner to help fund a bid.
While Wincor 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.
All players in the sector have recently been offering more banking software and services, including security and payments services, as the ATM hardware business is challenged by customers using more credit cards and evolving mobile payment systems, and less and less cash.
However, the crisis in retail banking is giving the ATM suppliers some short-term relief, as lenders closing branches set up additional ATMs so that customers can still withdraw cash.
Wincor and Diebold both already draw about 60 percent of their sales from software and services, the rest from hardware.
Wincor, founded by Heinz Nixdorf in 1952, was taken over by Siemens (DE:SIEGn) in 1990, before being acquired by buyout groups KKR (N:KKR) and Goldman Sachs Capital Partners (N:GS) in 1999. It was listed on the stock exchange in 2004 and the private equity groups have since sold their holdings.
(additional reporting by Alexander Hübner and Eric Auchard; Editing by David Holmes and Kevin Liffey) OLGBBUS Reuters UK Online Report Business News 20151017T143243+0000