Nautilus Hyosung Inc. may not have been able to purchase its rival in the off-premise automated teller machine market Triton Systems of Delaware Inc. from Dover Corp., but observers say it has already acquired some of Triton's customers.
The deal was announced in July, but last month, after the Justice Department said it would stifle competition, the companies scuttled it.
Analysts had estimated that Nautilus Hyosung would control 65% to 70% of the $175 million retail off-premise ATM market after buying Triton.
However, Leon Majors, the president of the Phoenix Marketing International's payment system practice, said in an interview last week that the long-pending deal created uncertainty in the market, prompting some of Triton's customers to defect.
"Triton's large" independent sales organization "customers might have switched sourcing to Nautilus Hyosung because they believed Nautilus Hyosung would buy Triton," Majors said.
As a result, he estimated that Nautilus Hyosung's share of the off-premise ATM market has already exceeded 60%.
"They are an 800-pound guerrilla," he said.
Phil Suitt, the president of ATM Ventures, a Spring, Texas, reseller that offers machines from both Triton and Nautilus Hyosung, said in an interview that the Justice Department's review of the deal hurt Triton.
"It is really unfortunate that it took so damn long for nothing to happen," Suitt said. "It is really unfair to Triton, because its business has been in limbo for several months."
James Phillips, Triton's director of North American sales, agreed with that assessment.
"We had our hands tied," he said. "There has been a black cloud over us for the past 10 months."
In a May 22 press release, Triton said, "The companies jointly decided to terminate their stock-purchase agreement, because of impediments that arose in the course of the antitrust process by the United States Department of Justice."
The companies had initially said that the acquisition would close in October.
A Justice Department representative said: "The antitrust division conducted a thorough review. If the transaction had gone through, small retail establishments would have paid higher prices for retail ATMs. Competition in the retail market will be maintained."
Nautilus Hyosung did not return e-mails requesting comment.
Triton has alleged in the past that Nautilus Hyosung uses its clout to undercut other ATM companies.
In April of last year Triton filed a lawsuit claiming that a former executive was using insider knowledge to create a new ATM company.
In a filing describing the highly competitive off-premise ATM market, Triton wrote that Nautilus Hyosung "has been a particularly strong competitor because it has been offering ATMs at lower prices and driving prices down in an apparent attempt to force other ATM manufacturers, such as Triton and Tranax [Technologies Inc], out of business."
Nautilus Hyosung, of Seoul, markets its ATMs in the United States through Nautilus Hyosung America of Coppell, Texas.
Phillips said that Triton sells ATMs in 24 countries, and plans to focus on additional international sales.
He also said that Triton wants to look to the future.
"We are now free to run our business. We are moving forward as a stand-alone company," he said. "We are rolling out a new product later this year."
However, Phillips also said Triton had hired additional staff in anticipation that the deal with Nautilus Hyosung would go through. Now he expects some layoffs.