Wincor Nixdorf acquisition will bolster Diebold’s position on ATM market in China

Written by Denis Suslov || 19 Oct 2015

The US ATM manufacturer Diebold is discussing a potential takeover with Wincor Nixdorf, a German ATM manufacturer. Wincor Nixdorf was offered approximately EUR 1.74 billion at EUR 52.50 per share, a price which includes a 30% premium over the stock price on the date of the offering.

The two companies are number 2 and 3 globally, but the ATM market is slowing down, as mature markets are already saturated and sales in the emerging markets are quickly reaching their peak. The industry is also feeling pressure from virtual payments as the shift away from cash and bank cards is happening across the world.

Both companies are combating the trend and shifting their focus towards software solutions and services. For example Wincor Nixdorf has put EUR 80 million to invest in non-hardware solutions in 2015, however the non-ATM business is yet to offset the revenue loss that Wincor Nixdorf is suffering due to the shrinking hardware market. Wincor Nixdorf has reported 57% operating profit decline in the first three quarters of 2015.

According to Diebold, the new acquisition will provide the company with access to the European market where it now generates less than 15% of revenues. Most importantly, the combined global market share of 35% will make the company a global leader, ahead of NCR with 25% of the market.

What is overlooked in many reports is the impact of the acquisition on the two companies’ position in China, the largest ATM market in the world. Diebold and Wincor Nixdorf accounted for 6.71% and 2.86% in 2014, down from 9.16% and 4.56% in 2013, respectively. The two companies were the 5th and 8th largest players in 2013, but Diebold went up in ranks to the 4th place as it overtook NCR. Wincor Nixdorf sled to the 11th place, pushed back by advancing domestic competition.

Based on 2014 data, the acquisition will put Diebold’s market share at around 10% and will strengthen Diebold’s position right behind the market’s top 3 players. Competition in China will likely intensify for foreign players, but the move will provide Diebold with some boost to better compete with Chinese and Japanese manufacturers dominating the market.

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