VeriFone Systems Inc. confirmed its plans to spin off Hypercom Corp.’s U.S business after its planned merger is completed in the second half of this year, according to regulatory filing Wednesday.
In November, the San Jose, Calif.-based terminal maker announced an all-stock purchase of its rival Hypercom valued at $485 million including net debt VeriFone would assume (
Last year, VeriFone said it was considering divesting the Scottsdale, Ariz. terminal maker’s U.S. business in order to avoid anti-trust issues.
Now VeriFone’s strategy is clear.
“Hypercom’s U.S. business … is expected to be disposed of in connection to the merger,” said VeriFone, which bought Hypercom for its holdings in continental Europe, in a regulatory filing.
VeriFone’s actions could have long-term consequences, says Wedbush Morgan analyst Gil B. Luria. “Disposing of the U.S. business makes [the merger] more complicated,” he says. “You are going to have two companies selling the same product line that lays out the same framework.”
VeriFone could continue sales of Hypercom’s product line in the U.S. for at least several years after the company finds a buyer, Luria says. VeriFone is most likely already speaking to regulators, he adds.
“That’s why the merger date is so far out,” Luria says. “For them to announce a deal and say it’s going to be done in the second half of 2011, that’s a very long time frame.”
VeriFone also outlined its plans for Hypercom’s current chief, Philippe Tartavull. Hypercom renewed Tartavull’s contract on Dec. 30, 2009, extending it through Dec. 31, 2012. Tartavull joined Hypercom in February 2007 as president and in December that year added CEO to his title.
As a result of the merger, Tartavull would receive $675,000–roughly 18 months of pay, until he is let go at the end of 2012. He would receive a larger figure if the merger is completed before the end of June. Tartavull’s total compensation, which includes “reasonable” moving expenses and health insurance, would reach about $5 million.
Other Hypercom executives would receive similar deals.
A VeriFone spokesperson refused to comment; A Hypercom spokesperson did not immediately returned a request for an interview.
What do you think about this? Send us your feedback.
