Tech companies have been on a shopping spree, and VeriFone — with $400 million in cash — tells me they are ready to spend, spend, spend.
The claws have come out. This time it’s electronic payment device maker VeriFone versus rival Hypercom. VeriFone's CEO tells me that he's moving forward with its hostile takeover of Hypercom after two rejections in as many weeks.
“We continue to be interested in the business but we’re very disciplined buyers,” VeriFone CEO Doug Bergeron told me.
“[Hypercom] had good and bad quarters for the last 10 years and it’s not structurally positioned well enough to be a stand alone business,” Bergeron said of the rationale behind VeriFone’s unsolicited bid. “We think we could solve that problem for Hypercom shareholders and in the meantime benefit VeriFone shareholders.”
Early last week, San Jose-based VeriFone began drafting a comeback offer — albeit an unsolicited one — after Hypercom rejected their first bid on September 27. In this second offer, announced on Monday, VeriFone put up a cash deal valued at approximately $290 million. The first bid offered a 69% premium to Hypercom's stock-price average for the 30-day period ending Sept. 23.
Hypercom’s response to both offers? No way. Executives at Hypercom didn't want to comment, but the company’s lawyers told me that Hypercom sees the offer as undervaluing the future valuation of the company. They also characterizedf the bid as a defensive and anti-competitive measure against Hypercom taking market shares from VeriFone in Europe.
In response, Bergeron said that VeriFone has grown more than Hypercom in the past 10 quarters.
“They’ve had several quarters where they haven’t grown at all,” he said. “That means we’ve been taking market share from them, not the other way around.”
Hypercom’s lawyers also told me that the company considers the bid disruptive of business. Bergeron countered that, in their very nature, all mergers and acquisitions are somewhat disruptive to business.
Unwavered by its catfight with Hypercom, VeriFone announced another acquisition deal in Italy on Monday. The company has proven to be a powerhouse in emerging markets, seeing 35-40% growth in China and revenues of $100 million in newcomer Brazil.
As for its continuing pursuit of Hypercom, Bergeron said that, “the way forward is a friendly transaction that can be reasonable for everyone.”
Wishful thinking? We’ll see.
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