On February 8, Ingenico offered to acquire all of the outstanding shares of Hypercom for US$ 6.25 (EUR 4.31) per share in cash, which is equivalent to a total value of US$ 332 million (EUR 229 million) for the whole company (cf. Smart Insights #08-07). Ingenico offer meant Hypercom had to drop the ongoing acquisition of Thales terminals.
After an exchange of letters made public, Hypercom and Ingenico had some negotiations, but failed to reach an agreement. Hypercom was bound by a commitment to pursue Thales eTransactions acquisition guaranteed by a US$ 10 million (EUR 6.8 million) deposit.
On February 14th, no agreement had been found between Ingenico and Hypercom, and Hypercom announced the execution of its share purchase agreement with Thales SA to purchase its e-Transactions business for US$ 120 million (EUR 81.6 million) The deal also includes a potential earn out of up to an additional US$ 30 million (EUR 20.4 million). The transaction is expected to close by March 31, 2008.
The acquisition of Thales eTransactions terminals business brings Hypercom a strong footprint in Europe where the company presence was limited. Thales eTransactions is a strong player in Germany, Belgium, Spain, UK, France, and Sweden. It also brings Hypercom a real expertise in smart cards: being mainly present on the American market, Hypercom historically was late to see the need for smart card integration, whereas Thales, as a European company has been deeply involved with smart cards, especially with EMV since its very beginning.
After a hectic week, we have now a payment terminals market with three major players: Ingenico, VeriFone and Hypercom. Although they have a different historical background, these three players have a global coverage, and have an expertise in all areas of the payment terminals industry. Differentiation will come now from the ability for each company to integrate new demands, and to evolve form a pure hardware business to a service provider position.
After the conclusion of this series of events, Hypercom share closed at US$ 4.18 (EUR 2.84), down 14% on Monday Feb. 14, and Ingenico closed at EUR 17.00, up 8.56% on Monday Feb. 14.