VeriFone Buys Hypercom

VeriFone Systems Inc. (PAY - Analyst Report) recently completed the acquisition of Hypercom Corp., one of the company’s competitors. In order to get the consent of acquisition from the U.S. Department of Justice (DoJ), VeriFone agreed to divest Hypercom’s U.S. payment systems business to The Gores Group LLC.

Earlier, VeriFone and Hypercom had agreed to sell the U.S. payment systems business of Hypercom to Ingenico S.A. to eliminate the antitrust issues related to the acquisition of Hypercom. However, the deal was terminated after the DoJ sued VeriFone, preventing it from acquiring Hypercom.

The DoJ believed that the deal would aggravate the antitrust issues as the three companies (VeriFone, Hypercom and Ingenico) together serve 90% of the point-of-sale (POS) terminals market in the U.S. This may result in reduced competition and higher prices in the POS terminals.

Last year, VeriFone struck a deal to acquire Hypercom for approximately $7.32 per share or $485 million, including net debt assumed by VeriFone.

Management anticipates that the acquisition would add $350 million to non-GAAP revenue and 20 cents-25 cents to non-GAAP fully diluted EPS in fiscal year 2012.

As a consequence of the merger, the company expects to expand its operations in Continental Europe by leveraging Hypercom’s position in the European markets.

Furthermore, VeriFone had declared earlier that the acquisition would throw up significant operating synergies emanating from the elimination of a product overlap, administrative costs and sales expenses in many markets.

Based in San Jose, California, VeriFone provides solutions for electronic payment systems for the financial, retail, hospitality, petroleum, transportation, government and health care vertical markets.

Read the full analyst report on PAY