Verifone (PAY) to Divest Hypercom's (HYC) PoS Business in Proposed Acquisition
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Hypercom Corp. (NYSE: HYC) and VeriFone Systems, Inc (NYSE: PAY) shares both saw a morning jump into positive territory following the U.S. Department of Justice's call for Verifone to divest Hypercom's point-of-sale (POS) business, effectively completing the acquisition. Shares of both companies have since settled back into negative territory.
The Department said the divestiture should eliminate the merger's potential to harm competition in the sale of PoS terminals.
According to the release from the U.S. DoJ, the department filed a lawsuit on May 12, 2011, in U.S. District Court for the District of Columbia, alleging the proposed transaction would eliminate important competition in the sale of PoS terminals. The DoJ also said a proposed divestiture to the only other significant provider of PoS terminals, Ingenico, did not remedy the competitive concerns with the merger. VeriFone and Hypercom together control more than 60 percent of the U.S. market for the PoS terminals used by the largest retailers. They are two of only three substantial sellers of other types of PoS terminals.
To remedy the situation, Hypercom will divest its PoS business to the Gores Group, pending court approval. If the assets are not sold to Gores within 20 days following entry of the final judgment, a trustee will be empowered to sell the assets to another buyer acceptable to the United States, in its sole discretion.
Verifone is down 3.6 percent on the session, while Hypercom is off 2.3 percent.
The Department said the divestiture should eliminate the merger's potential to harm competition in the sale of PoS terminals.
According to the release from the U.S. DoJ, the department filed a lawsuit on May 12, 2011, in U.S. District Court for the District of Columbia, alleging the proposed transaction would eliminate important competition in the sale of PoS terminals. The DoJ also said a proposed divestiture to the only other significant provider of PoS terminals, Ingenico, did not remedy the competitive concerns with the merger. VeriFone and Hypercom together control more than 60 percent of the U.S. market for the PoS terminals used by the largest retailers. They are two of only three substantial sellers of other types of PoS terminals.
To remedy the situation, Hypercom will divest its PoS business to the Gores Group, pending court approval. If the assets are not sold to Gores within 20 days following entry of the final judgment, a trustee will be empowered to sell the assets to another buyer acceptable to the United States, in its sole discretion.
Verifone is down 3.6 percent on the session, while Hypercom is off 2.3 percent.
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