Diebold Inc. (DBD, Financial) is a financial self-service, security and services company, headquartered in Green, Ohio, USA. It is the largest manufacturer of ATMs in the U.S. and is mainly involved in the construction, installation, sale and service of electronic and physical security products, self-service transaction systems (like ATMs) and software and integrated systems for worldwide financial and commercial markets.
With around 17,000 workers and business spanning 90 countries, Diebold has established itself as one of the leading banking machine manufacturers in North America. Diebold’s recent purchase of a Canadian company that develops software for automated teller machines and similar technology is a strong move by the company to project its intentions of a transformation. It is now strongly putting its long- term strategy in place by changing to more of a services and software company, not just hardware maker.
Diebold’s acquisition of Phoenix and the strategy
Diebold Inc. has announced its acquirement of Phoenix Interactive Design Inc., a pioneer software developing company for ATMs and other such financial self-service operations. This acquisition is expected to lay the foundation of Diebold’s software business taking a leap.
Founded in 1987, the Canadian company, which is based in London, Ontario, has an extensive and important clientele list that includes National Australia Bank Group (NABZY, Financial), Cincinnati-based Fifth Third Bancorp (FITB, Financial), and TD Canada Trust (TD, Financial).
The Phoenix operation will be led by Alan Kerr, Diebold executive vice president, software, and the acquisition is not expected to bring a change in the employee structure, either at Phoenix Interactive headquarters, or at Diebold’s headquarters in Green. Phoenix's approximately 200 employees are expected to unite with Diebold's global workforce.
Kyle MacDonald, CEO of Phoenix, will be retiring but will take an active participation during the integration for an effective duration of time to make sure the transition takes place seamlessly.
Located downtown on Wellington Street, Phoenix will not relocate after the acquisition. According to Kapil Lakhotia, chief executive of the London Economic Development Corp., it is a good and logical decision, as there is a shortage of technology staff around the world, and a software maker’s success is decided by its talent pool.
Financial terms of the acquisition were not immediately disclosed, with Diebold declaring the financials probably will be outlined in an impending filing with the Securities and Exchange Commission.
Diebold and Phoenix after the acquisition
The acquisition of Phoenix is expected to boost Diebold’s growth in the fast-emerging managed services and branch automation areas. This is an endeavour by the company to convert to a services-led, software enabled enterprise.
Diebold intends to incorporate the talent of the Phoenix team and utilize its own reach to penetrate the Phoenix solution in more markets worldwide.
With Phoenix’s software solution that's accepted and respected in the industry, along with its expertise and capabilities, Diebold hopes that the united company will be able to offer a better, more innovative software solution that balances Diebold's current services in ATMs and security systems.
The American company believes that, by acquiring Phoenix, it is making a lucrative investment in the software segment, which is the fastest-growing section of the financial self-service industry. This is definitely going to give Diebold a lot of credibility with financial companies globally.
Conclusion
Diebold is seeking to emerge as a software company and Phoenix will certainly play a key part in that. With the company’s strong foothold in the industry with best-in-class global footprint of multi-vendor, sophisticated function software customers, the acquisition of Phoenix seems like a smart move. But how the unification works out in the future, one has to wait and see.
