Hypercom Corp., which is second to Verifone Inc. in the point of sale terminal business, said Friday that it filed with the Securities and Exchange Commission for an initial public offering of 11.25 million shares.
The IPO, if given the green light by regulators, would make the New York Stock Exchange-traded company the only "pure play" in point of sale devices. Verifone was acquired this summer by Hewlett-Packard Co.
Phoenix-based Hypercom selected Lehman Brothers to lead its offering, with Salomon Brothers and Cowen & Co. participating. It is expected to be priced within two months and to fetch about $18 a share.
Executives involved in and close to the offering declined to comment in deference to the customary "quiet period."
Observers said the stock offering could give Hypercom access to capital that can help it diversify. Another likely outcome would be to raise the profile of a company that had been relatively free of the glare of public financial accountability.
"Hypercom was never really able to be a large-scale competitor to Verifone," said John Backus, president and chief executive officer of Intelidata Technologies Inc., Herndon, Va.
He said Hypercom and investment bankers may view the IPO as "an opportunity to change the competitive landscape."
According to the prospectus filed with the SEC, Hypercom plans to use proceeds to repay $21 million of debt and to fund $20 million of facilities expansion.
In addition, it expects to put a portion of the funds into the development of products and services for smart cards. It also said it might use the new capital for acquisitions.
In light of the Verifone acquisition, some observers consider Hypercom a prime takeover candidate. But the IPO could also serve to bolster the independence it had asserted while in private ownership led by the founder and chairman, George Wallner.
If Hypercom were to be acquired, the $1.2 billion price tag of the Verifone deal establishes a benchmark against which prospective offers can be measured.
Mr. Wallner and his brother Paul, vice chairman, would own about 63.5% of the common stock after the offering, according to the SEC filing.
Besides its core terminal manufacturing, Hypercom has a sizable enterprise network management business, typically used by large branch banks.
Verifone was already a few years into Internet commerce development when Hewlett-Packard came calling, and those efforts were a major attraction to the Silicon Valley giant.
Gary Craft, analyst at Robertson Stephens & Co. in San Francisco, said the Hypercom IPO may be aimed at capitalizing on the differences in strategic approach.
"Maybe Hypercom hopes to clean up as Verifone increasingly focuses on the virtual space," he said.
Sources noted that Hypercom has been earning money "hand over fist" of late.
In its fiscal year 1997, which ended June 30, Hypercom's revenues were $196.7 million, up from $163.6 million in the prior year, the prospectus said.