Intellectual Property Law

Yahoo isn't the only target of an unwelcome takeover. Diebold Inc., maker of automated teller machines, security systems and voting machines, was the recent target of an unsolicited $2.63 billion takeover offer from United Technologies Corporation, a leading aerospace defense contractor, whose divisions also include Otis elevators.

The offer, which Diebold disclosed this weekend, amounted to $40 per Diebold share at a time when Diebold stock was trading at around $24 a share -- or at least it was before news of the takeover was made public. The price has since risen to about $37 a share.

Diebold rejected the offer, but this doesn't mean the deal won't eventually go through, judging by the chairman of the board's statement that UTC was offering too little.

"The board strongly believes that UTC's proposal significantly undervalues the company and fails to reflect Diebold's strengths and significant upside potential," said John N. Lauer in a Diebold press release about the offer.

The NY Times editorial board sees a problem with a defense contractor, that has a strong corporate interest in the outcome of presidential elections, having any role in the counting of votes, should the takeover succeed.

Diebold Inc. has made itself a sitting target for a takeover. The company has been under investigation for its accounting practices and announced plans to lay off 5 percent of its workers (about 800 employees) last month.

Diebold has also had numerous problems with its elections division. It tried to sell-off the troubled voting machine division to distance itself from bad publicity the machines generated, which was dragging down the parent company's stock price, but couldn't find any buyers. The firm finally spun off the voting machine business into a different division last August and renamed it Premier Election Solutions.

According to this NY Times story, this isn't the first time United Technologies tried to acquire Diebold. It made an offer two years ago, which Diebold also rebuffed.

Photo: Pamrotella.com