FROM UBS
Wincor Nixdorf AG
Diebold approach?
Diebold reported to be interested in taking over Wincor
Reuters reported that Diebold is in talks about a possible acquisition of Wincor. Both
companies are being advised by investment banks, Reuters stated, also citing another
report from FAZ newspaper. Both companies declined to comment. We think Wincor
would seem likely to be against a takeover given earlier statements from it. However,
we also think that its protection against a potential takeover is weak. A bidding war
with the other major industry player NCR seems rather unlikely to us on the grounds of
a too-dominant market position. However, Wincor's low share price combined with its
restructuring potential and cash generation capabilities could still attract other potential
suitors.
Diebold's market cap is 2x Wincor's these days
Due to Wincor's underperformance and the US$ appreciation, the relative sizes of the
companies has moved into Diebold's favour. Wincor has a market cap of €1.0bn vs
Diebold's €2.0bn and the EVs stand at €1.2bn and €2.3bn (based on Reuters)
respectively. We expect Wincor to achieve an EBIT of €107m in CY15 and consensus
expects €159m for Diebold. Hence Wincor trades on 11.2x EV/EBIT based on our
estimates and Diebold on 14.5x based on consensus data.
Wincor does not have much protection against a potential takeover
We obviously expect a very favourable Wincor share price reaction. We think that after
Wincor's major share price fall and previous press reports that Wincor could be for sale,
it is not surprising that such a report comes up. Wincor has denied that it has put itself
up for sale at the recent Q2 report in April. While it could be interested in assembly
partnerships for certain hardware parts it also stated that it is not interested in a merger
with a large peer. Therefore, a takeover approach could be denied. Nevertheless, given
its high free float, Wincor does not have much in the way of protection. In our view a
potential merger with a major peer would not solve Wincor's strategic issues such as a
further major structural decline in hardware sales and increasing its software and
cashless reach.
Valuation:
We value Wincor on a target EV/EBIT multiple of 9.7x.