Diebold to Gain More from Wincor Acquisition
Industry Trends
20-10-2015 00:00:00
Diebold to Gain More from Wincor Acquisition
In buying Germany's Wincor Nixdorf, Diebold would gain new technology and retail relationships vital to its success in an economy that is growing much less reliant on plastic cards.

The $1.8 billion Wincor deal, which is still a non-binding agreement, would be the latest of many transformative moves the North Canton, Ohio-based ATM and bank technology vendor has made in the past decade to adapt to a rapidly changing market.

The acquisition is subject to due diligence, according to an announcement on Diebold's website. A combination of these companies would create the world's largest manufacturer of cash machines and ATMs, with nearly $6 billion in early sales.

The Diebold of 10 years ago was a troubled company, reeling from the very public failings of its voting machine business and facing a class action from shareholders and the beginnings of an SEC investigation of its financial reports that would eventually result in a $25 million fine. This was a shaky foundation upon which to enter the recession, a period of time in which many banks stopped building branches and buying ATMs.

Diebold's response back then was to broaden its focus to other bank technology services without moving too far away from its core competencies (a lesson learned from its elections business). It began winning contracts for ATM management and adding technology in anticipation of the boom in mobile and tablet-based banking.

"I want to be able to participate in that (mobile future), and help the company thrive as the world changes ... making sure we aren't so blinded by something that we call an ATM that we miss the forest for the trees," said Thomas W. Swidarski, Diebold's CEO from 2005 through 2013, in a 2012 interview with Bank Technology News, a sister publication of PaymentsSource.

Diebold has continued on this path, acquiring and deploying technology that allows financial institutions to add more self-service and mobile capabilities to ATMs, which in turn allows banks to streamline branch operations.
But Diebold's journey is not yet complete, and it still has missing pieces that Wincor can address. For example, Diebold gets only 15% of its sales in Europe today, while Wincor gets nearly three quarters of its business in Europe.

"They each have dominant market share in unique regions, Diebold in the U.S. and Wincor in Europe," Nicole Sturgill, principal executive advisor for CEB TowerGroup, says, who further adds, "They've each ventured into the Latin America and Asia Pacific regions as well, so a merger would give them economies of scale to improve their offerings in those areas.";

Diebold has made deals with local banks to deploy ATMs in Ecuador and recently reorganized its efforts in Latin America. In Asia, Wincor Nixdorf is the No. 2 supplier of ATMs.

Diebold also needs to find a new audience for its products, particularly as banks close branches and customers manage their finances through a growing range of retailers and other providers. "Wincor brings a strong retail presence to complement Diebold's strength in financial services," said Sturgill.

Wincor counts 17 of the world's largest 25 retailers among its clients, to whom it delivers more than a million point-of-sale units. The Paderborn, Germany-based company also offers a range of retailer technology including PC-based point-of-sale systems and cash recyclers. Earlier this month Wincor added NFC technology to its ATM hardware.
-K Ramanathan ram@justransact.com

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