The Phoenix point of sale terminal maker Hypercom Corp. said Monday it is considering an acquisition offer from a French rival, Ingenico SA.
Last week Ingenico sent a letter to Hypercom's board offering $6.25 a share for the company.
"Hypercom has been on our radar screens for quite a long time," Philippe Lazare, Ingenico's chief executive, said in a conference call Monday.
Buying Hypercom could improve Ingenico's weak stance in the U.S. banking market, he said. Ingenico could even raise its offer during the due diligence process, but "the aim of the due diligence is not to raise the offer."
If a deal is reached, it could close "midyear, in the best case," Mr. Lazare said.
Hypercom responded Monday by saying it is considering Ingenico's proposal.
"We have opened discussions with Ingenico to more fully determine their ability to promptly make a credible, firm, and fully financed offer, with certainty of closing, as well as to determine the complete terms of their proposal," Norman Stout, Hypercom's chairman, said in a press release.
Representatives for Ingenico and Hypercom said executives were not able to give interviews on the topic Monday.
Mr. Stout stressed that any negotiation with Ingenico would not derail the deal Hypercom announced in December to acquire Thales SA's e-transactions unit. Ingenico tried to interfere with that deal by demanding that the private-equity firm Francisco Partners II LP withdraw its funding for the transaction.
Ingenico said last month that it was suing Francisco Partners for allegedly breaching a 2006 confidentiality agreement after Francisco and Hypercom issued a commitment letter in December.
In a Jan. 28 filing by Hypercom with the Securities and Exchange Commission, Francisco Partners provided a letter saying, "Ingenico's claim is without merit and is a rather transparent and desperate attempt by Ingenico to interfere with the Hypercom/Thales transaction and its financing."
On Monday, Mr. Lazare said Ingenico is "not interested in buying the combination of Hypercom and Thales," despite his company's enthusiasm for Hypercom. "We are interested in buying Hypercom."
Ingenico said its offer for Hypercom is a premium of about 52% over its share price on Feb. 5, when the French company sent its letter. Hypercom's stock opened that day at $3.99 a share, and by Monday it had jumped more than 25% to over $5, though it has seen better days. Ten years ago it was trading at more than $13.
The letter from Ingenico stresses that the premium is "meaningfully higher than most premiums in acquisitions of U.S. technology companies."
The news the Hypercom was in play prompted Ingenico's main U.S. rival, VeriFone Holdings Inc. of San Jose, to re-examine the competitive landscape.
Doug Bergeron, VeriFone's chairman and chief executive, said in an e-mail that Ingenico and Hypercom have overlapping products, and that Ingenico could drop some of them after acquiring Hypercom. "Longer term, we believe that a consummated transaction leaves the industry, and especially VeriFone, with some very attractive dynamics."
Gil B. Luria, an analyst at Wedbush Morgan Securities, published a research note covering Ingenico's offer and another on the potential effect on VeriFone.
Any deal reached between Ingenico and Hypercom would "cement Ingenico's lead as the top provider of payment terminals," Mr. Luria wrote in the note on the offer.
Also, there is a sense of urgency on Ingenico's part, he wrote. "We believe that Ingenico sees the potential acquisition of Hypercom as its last chance to add significant share in the U.S. financial services channel."
However, Hypercom's commitment to closing its deal with Thales could prove an impediment to an acquisition by Ingenico, Mr. Luria wrote. "Ingenico may be attempting to derail Hypercom's deal with Thales' unit," after trying "to derail the deal two weeks ago" by filing the suit against Francisco Partners.
Ultimately, he wrote, Hypercom should accept Ingenico's offer, though doing so would be bad news for VeriFone.
"By giving Ingenico the share lead in almost every major region and inserting it into the U.S. financial services channel, such a deal would make the competitive environment more challenging for VeriFone," Mr. Luria wrote in the note on VeriFone.
It is unlikely that VeriFone would make a competing bid for Hypercom, he wrote, but "in order to match Ingenico's scale," VeriFone could make an offer to the Thales unit if Hypercom drops its bid as a result of an acquisition by Ingenico.
