The Stalwart

My Call For Best Mergers

So far my call for the best mergers of all time isn't generating many responses. Maybe because it's a weekend. Maybe because nobody's reading this blog. Or maybe because nobody can think of any. This is a second call

You Can Still Finance An Energy Acquisition

AP:

Private equity firms are snapping up energy infrastructure assets like pipelines and storage facilities, which are some of the few buyouts likely to attract financing as credit markets remain in a deep freeze.

Firms keen to put capital to work say their ability to spend immediately on infrastructure makes them ideal buyers when energy companies jettison assets, as with First Reserve's recent deal to buy a 20 million-barrel storage terminal off the Florida coast -- the Caribbean's largest.

UTX Makes Bid For Diebold; 66 Percent Premium

I'm not the first to notice this -- there was an AP piece floating around last week on same -- but the number of unsolicited, big-premium buyout offers coming out during the market swoon, is an interesting trend. The latest: United Technologies is making a bid for Diebold representing a 66 percent premium. This follow EA's bid for TakeTwo and of course that one with Microsoft and some other company.

Diebold, like the other two, is languishing near 52-week lows, well off their 52-week highs. Tomorrow morning it'll spike up, obviously. What interests me is the uniform reactions that the minnows have to the larger fish coming to swallow them.

They have to say that the bid "significantly undervalues" them. Especially, when there's been a prior private (rebuffed) approach, which there was here (just like YHOO and TTWO). Here's part of the letter UTX sent to Diebold:

United Technologies (UTC) offers to acquire all of the outstanding shares of Diebold for $40 per share.  This is a 66% premium to Diebold's current share price and a 45% premium to the three month trailing average.

We have sought for more than two years to engage Diebold in constructive discussions to increase your shareholder value.  Most recently, I wrote to you on February 19th outlining the benefits to Diebold's shareowners, employees, and other constituencies of a business combination.

And this is somewhat unusual. UTX included a copy of the letter Diebold sent earlier in February (I don't recall ever having seen this before):

I have received your letter to me dated February 19, 2008.  As you correctly noted in your letter, the prior overtures on your behalf to me and another Diebold director were discussed extensively at a regularly scheduled Diebold board meeting last week.  After careful consideration, our Board unanimously determined at that meeting that it was not in the best interests of the corporation or its shareholders to pursue discussions with UTC regarding a business combination with Diebold.  Nothing has changed since that meeting that warrants revisiting this issue.

In addition, we respectfully request that, from here forward, neither you nor any other representative of UTC contact any member of the Diebold Board.

So now, having written that, they're faced with a public bid on a Sunday night. They can't just accept the bid and realistically, they can't say the bid is to low, because it's 66 freakin' percent above the market cap, unless they really think the market is totally on crack, which is conceivable. Anyway, all of these: TTWO, YHOO and now DBD will be interesting to watch to see how they play out.