The pandemic and the longer-running shift to online payments have diminished the need for cash and automated teller machines used to dispense it. But the move by leading US ATM maker NCR this week to gatecrash a bid for rival Cardtronics shows there is still value to be squeezed from cash dispensers. The question for investors is how long gains can be sustained.

Consumers still love the feel of banknotes in their hands. ATMs represent a stable ex-growth business. The number of ATM cash withdrawals fell only slightly to 5.1bn between 2015 and 2018. The value edged up by $3bn to $800bn according to a study published by the Federal Reserve.

NCR’s $39-a-share all-cash proposal values Cardtronics, the world’s biggest ATM owner and operator, at about $2.4bn, including debt. The unsolicited offer trumps the $35-a-share bid that Cardtronics accepted last month from private equity group Apollo Global and investment firm Hudson Executive Capital. It also represents a steep 45 per cent premium to Cardtronics’ share price on December 8, a day before Apollo and Hudson Executive unveiled their bid.

Rising bank branch closures have heightened the importance of ATMs. Between 2008 and 2020, more than 13,000 bank branches closed in the US, representing 14 per cent of the total, according to the National Community Reinvestment Coalition.

Still, the US ATM market is a saturated one, which means this hostile bid has defensive overtones. Buying Cardtronics — which generated $1.3bn in revenue in 2019 and has a network of 285,000 ATMs across 10 countries — would further NCR’s goal of generating 80 per cent of its revenue from software and services.

To survive, manufacturers such as NCR have been investing in technology. Cardless ATMs linked to smartphones are one example. The group raised sales and profits of 8 per cent in 2019.

The problem with defensive takeovers is that they tend to postpone rather than avert a reckoning for companies in mature industries. Examples include Diebold Nixdorf, formed from Diebold’s $1.9bn takeover of German rival Wincor Nixdorf in 2016. Since the deal, the business has shed more than half its value.

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