VeriFone to acquire Hypercom to accelerate global expansion
Under the terms of the transaction, which has been unanimously approved by the boards of directors of both companies, Hypercom shareholders will receive a fixed ratio of 0.23 shares of VeriFone common stock for each Hypercom share they own, valued at approximately US$ 7.32 (EUR 5.35) per share based on the closing price on November 16, 2010. VeriFone will also assume Hypercom’s outstanding warrants and stock options in the transaction.
The agreement comes after Hypercom has rejected the acquisition offer from VeriFone Systems for US$ 5.25 (EUR 3.8) per share or US$ 290 million (EUR 213 million) in cash. Said a statement at the time: "Hypercom believes that VeriFone's proposal is opportunistic and intended to disrupt its business, which has successfully taken market share from VeriFone in several markets."
Now, after being raised by 40%, the new bid has been backed by Hypercom's board and is expected to close in H2/2011, subject to shareholder approval.
Hypercom says it has increased revenue from almost US$ 290 million (EUR 211.9 million) to approximately US$ 450 million (EUR 328.9 million) over the last three years but it is the company's 23% market share in Europe, obtained thanks to the acquisition of Thales eTransactions that has attracted VeriFone. Also last month it entered into exclusive talks to buy the point-of-sale business of Gemalto as part of a wider strategic partnership between the two firms.
VeriFone CEO Douglas Bergeron, says: "Hypercom has established itself in a number of important European markets, and this acquisition is an excellent and complementary way for us to accelerate our overseas growth, increase innovation and build value for our shareholders."
Since several years, we have witnessed the ongoing restructuring of the payment terminal industry, where major vendors are struggling to take the leadership by acquiring tier II tier III vendors all over the world. As a result, today we have just two major vendors left in the industry. The combination of Verifone and Hypercom is expected to create the largest vendor in the market providing approximately 5 million units annually. Until now, Ingenico was the market leader with an estimated annual shipment of 4 million units.
Recent acquisitions in the payment terminal industry:Hypercom- Thales eTransaction, 2008
Verifone- Gemalto terminals, 2010- Way systems, 2010- Trintech, 2006- Lipman, 2006
- Roam Data, 2010- Fujian Landi (55%), 2008- Sagem Monetel, 2007- Moneyline, 2006- Fortronic- Telesincro- IVI Checkmate