If United Technologies really has its heart set on Diebold, then it’s going to have to do better than that, says the latter. The thwarting leaves United with only a few options: raise its bid, stage a boardroom proxy battle, or go hostile. But, in this case, some options appear slightly more realistic than others.

Diebold Inc. yesterday rejected United Technologies Corp.'s $2.63 billion buyout offer, made public over the weekend, saying it significantly undervalued the company's potential.

Diebold called UTC's offer an opportunistic attempt to buy the company at a time when shareholders don't have enough data to measure its value. Diebold hasn't filed financial statements with the Securities and Exchange Commission for almost a year because of a continuing investigation into its revenue-recognition practices.

"The board believes that it would be irresponsible to engage in discussions with UTC at this time," said Diebold's nonexecutive chairman, John Lauer.

"We are confident that executing on our strategy will create substantially greater value for shareholders than UTC's proposal," Mr. Lauer said.

United Technologies said late Sunday it had been courting the maker of automated-teller machines and electronic security products for two years with no headway, and made public its $40-a-share bid for the company to enlist the help of Diebold shareholders.

The bid represents a 66% premium to Diebold's closing price on Friday. If Diebold conducts a due-diligence financial review, United Technologies said it might be prepared to boost the $40-a-share offer.

Diebold's rejection of its offer leaves UTC with two options: either a proxy battle to replace the company's board with supporters, or make a hostile bid by offering to buy shares directly from stakeholders. However, a hostile takeover is unlikely as Diebold has in place a shareholders-rights plan, also called a "poison pill," which would make an unwelcome purchase significantly more expensive.

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