Mary Swann, vice president, executive corporate counsel and assistant corporate secretary of Diebold Nixdorf, discusses the 2016 Diebold-Wincor Nixdorf merger
In August 2016 US-based Diebold completed its $1.8 billion takeover of and merger with Germany's Wincor Nixdorf. The merger brought together two leading competitors in the market of self-service transaction systems (including ATMs), electronic and physical security products, software and related professional services for global financial and retail markets. The deal marked the first successful German-US exchange offer using US-registered shares as a portion of the consideration for shares of a German target company. It also established a new precedent in filing the registration statement with the US Securities and Exchange Commission (SEC) the day after the deal announcement. Diebold Nixdorf corporate counsel Swann reviews some of the challenges in the merger.
What are some of the key dynamics at play within the sector that Diebold Nixdorf operates in?
Our industry is changing and evolving. It is no longer only defined as ATMs at your local bank. While financial self-service remains a critical component of our business, people expect to connect with their money in new ways – faster, mobile, and user-friendly. Diebold Nixdorf, the combined organisation, is a global leader in connected commerce: providing financial self-service, payment terminals and information technology systems as well as the software and professional services that support them, empowering and enabling banking and retail partners to connect their customers with money in new and innovative ways.
What drove the acquisition of Wincor Nixdorf and how transformative is it?
Our combination transforms not only our company but our industry as we are now positioned to drive connected commerce globally with greater efficiency and innovation than any company in history. The legacy Diebold and Wincor operations are highly complementary globally and through our many inventions and innovations.
Each legacy organisation is firmly rooted in its home regions in Ohio, US and Paderborn, Germany, respectively. We have great pride in where we come from and where we are going. The combined Diebold Nixdorf brings new excitement to our home regions as this transaction has hoisted Diebold Nixdorf on the verge of the Fortune 500 list of top companies. Interestingly, Diebold was founded in Ohio in 1859 by a German immigrant Karl Diebold, and incorporated as an Ohio corporation in 1876. We maintain important and vital locations in North Canton, Ohio and in Paderborn, Germany.
What were the key challenges you had to overcome to close this cross-border merger?
The Diebold-Nixdorf combination marked the third-largest public takeover of a German listed company by a US acquirer in German history, and the only US-German public takeover of a 100% free float company in the last 15 years, which still reached the 75% minimum acceptance threshold necessary for full integration of both organisations.
Besides the commercial challenges associated with negotiating such a large-scale combination, we needed to devise a transaction structure that accommodated all requirements of both securities frameworks for each home jurisdiction while at the same time addressing the traditional challenges around jurisdictional requirements that are typical for any cross-border deal. By way of example, the transaction required merger control approvals from authorities in numerous jurisdictions worldwide. Obtaining the approvals needed for closing required working through detailed reviews of local and global markets. We cleared all antitrust closing conditions prior to August 2016, and are presently finalising the inquiry by the UK's Competition Markets Authority (which was not a closing condition).
Were there unexpected challenges in structuring the transaction? How streamlined or divergent are US and German securities laws?
The two securities regimes are not necessarily set up to be complementary. However, we were prepared and understood the securities environment going into the transaction. With the help of our legal counsel and securities experts in each country, thorough and timely disclosures, and an open dialogue with the regulatory authorities, we were able to conquer this task for the benefit of our global organisation, the industry and our combined customers around the world.
Were there particular legal strategies that worked especially well to manage the divergent legal regimes?
The consideration structure for the Wincor Nixdorf shareholders (cash plus Diebold stock per Wincor Nixdorf share) was a challenging structure. Being prepared was the best strategy. Doing the research in advance, understanding the path of comparable transactions, the framework of the securities regimes and the likely challenges helped to put us on the best path forward. Filing the initial Form S-4 with the SEC immediately after the announcement of the Business Combination Agreement was also critical and rather unique to this type of transaction.
However, although a difficult task, this was required to give the SEC the time it needed for a thorough review of the transaction and consideration structure, but also to put our transaction on a timeline to work within the German securities requirements and tender offer process. In the end, the SEC declared the Form S-4 effective on the same day the German offer document was published, as approved by German regulator BaFin (Federal Financial Supervisory Authority), commencing the tender offer.
What precedents could you work off for a US-German acquisition on this scale?
There had been a couple of other large-scale US-German combinations, such as the merger of Daimler with Chrysler and the proposed combination of the New York Stock Exchange and Deutsche Börse, but the Diebold Nixdorf transaction marked the first time that a US bidder offered stock as part of the offer consideration in a public takeover offer of a German listed company. So, in addition to thorough research of past precedents and an understanding of the interplay of US and German securities regimes, structuring the deal required some creativity and thinking beyond conventional structures.
What advice would you give to parties to best prepare for a cross-border US-EU acquisition?
Nothing new or novel – do your research, be prepared and be nimble. We knew this would be a challenge but we saw a path forward, and we calculated each step toward our goal. In the end, the Diebold Nixdorf community – our employees, partners and customers – can all focus on the future of our industry. And we are thrilled to be in the front of it.
|About the contributor|
Mary Swann is vice president, executive corporate counsel and assistant corporate secretary for Diebold Nixdorf. In her role, Swann oversees the corporate legal functions of the global organisation, including regulatory reporting and disclosures, mergers and acquisitions and corporate secretarial support. In addition to the Diebold/Wincor transaction, Swann has overseen key acquisition and divestiture activities at Diebold, including the divestiture of the North American electronic security business in 2016, acquisition of Phoenix Software in 2015, and other key strategic initiatives.
Prior to joining Diebold Nixdorf in 2012, Swann focused on her M&A practice at Brouse McDowell LPA in Ohio, representing a broad base of international and domestic M&A clients. Swann graduated magna cum laude in 2006 from the University of Akron School of Law and served as editor-in-chief of the Akron Law Review and Akron Tax Journal. Swann is an Ohio native, currently residing in Sharon Center, Ohio.Kaleidoscope Trust.