VeriFone Systems Inc. said Wednesday that it acquired Semtek Innovative Solutions Corp.

Semtek, of San Diego, develops the technology that VeriFone uses in its VeriShield Protect system, which encodes sensitive cardholder data during transactions. VeriFone was the lead investor in the company.

The San Jose vendor said Semtek shareholders received VeriFone common shares that valued the acquired company at $18 million.

Semtek will be absorbed into VeriFone's Integrated Systems organization.