Electronic payments processing company, VeriFone Systems, Inc. (PAY) recently launched a bid to acquire all of the outstanding shares of rival Hypercom Corporation (HYC) for $5.25 per share in cash.
Headquartered in Scottsdale, Arizona, Hypercom Corporation designs and sells electronic payment and transaction solutions, and value-added services at the point of transaction primarily in the Americas, northern EMEA (Europe, Middle East, Africa), southern EMEA and the Asia-Pacific.
Earlier, last week, VeriFone proposed to acquire all of the outstanding shares of Hypercom Corporation at a 0.21x exchange ratio. This offer represented a premium of 52% over the closing price of $3.84 of Hypercom shares on September 23 and 69% over the average share price for the last thirty trading days. But Hypercom has rejected the offer.
VeriFone expects to fund the purchase with cash on hand. VeriFone exited the fiscal third quarter with cash and equivalents of $400.5 million.
Management expects that the acquisition will expand the company’s footprint in Continental Europe, where its market penetration has been lower, compared to the rest of the world. The company feels that it is strongly placed in North America and has the required strength to finance the services driven transformation in Europe.
Management also stated that to address potential regulatory concerns and to accelerate the time to close, VeriFone will be willing to divest Hypercom’s small US business.
VeriFone expects the acquisition to throw up significant operating synergies that will emanate from eliminating product overlap, administrative costs and sales expenses in many markets. The combination of the two businesses will lead to better product development along with significant supply efficiencies for the combined business.
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