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ViVOtech Inc., a payment hardware and software provider specializing in near-field communication (NFC) technology, on Thursday said it is interested in buying the U.S. assets of Hypercom Corp., the point-of-sale terminal maker in the process of being acquired by rival VeriFone Systems Inc., San Jose, Calif.
Santa Clara, Calif.-based ViVOtech issued a news release saying “that it has approached VeriFone” to acquire Hypercom’s U.S. assets. That release corrected an earlier version that said ViVOtech “is negotiating with VeriFone” to acquire the Hypercom assets. Neither VeriFone nor Scottsdale, Ariz.-based Hypercom would comment. Spokespersons for ViVOtech did not respond to Digital Transactions News inquiries for further comment.
VeriFone, the dominant U.S. POS terminal maker, is buying Hypercom mostly for Hypercom’s sizable European operations and has said it would sell the U.S. business in order to gain regulators’ approvals. VeriFone expects to close the approximately $485 million stock-based acquisition in 2011’s second half.
ViVOtech, which has been a supplier to VeriFone, says it has shipped more than 800,000 contactless NFC readers worldwide since its founding in 2001 and has 80% of the U.S. contactless market. Sources estimate the U.S. has about 100,000 terminals that read contactless cards, fobs, and mobile phones equipped with contactless stickers, though the payment card networks have never disclosed the number.
Hypercom would give ViVOtech scale in the U.S. and a full line of mainstream POS hardware and software for merchant acquirers and independent sales organizations to offer to their merchant customers. ViVOtech, however, sees the possible acquisition as furthering the cause of NFC-based mobile payments, though exactly how is unclear. NFC chips in mobile phones to facilitate payments are the buzz of the card and Internet industries, with speculation abounding that Google Inc., Apple Inc., and Facebook all have plans for the upcoming technology. Yet so far those companies have gone public with nothing. “NFC mobile commerce is on the cusp of becoming reality,” ViVOtech chief executive Michael “Mick” Mullagh said in the release. “ViVOtech’s acquisition of the Hypercom U.S. assets would allow us to accelerate the adoption of this revolutionary new technology and ensure that a vigorous and competitive market emerges to drive innovation and choice.”
Mullagh went on to say that, “We see this as a strategic and transformative opportunity for ViVOtech to enhance our next-generation NFC platform, and accelerate the adoption of in-store mobile payment, loyalty, marketing and merchandising solutions in the U.S. ViVOtech is the only U.S.-based company in a position to support and provide continuity to Hypercom’s customer base and become a strong, viable third competitor in the highly competitive U.S. market.”
ViVOtech could more than quintuple its size should it strike a deal with VeriFone. In a regulatory filing, VeriFone has said the assets that a combined VeriFone and Hypercom would hold for disposal generated about $124 million in revenues in 2009. Privately held ViVOtech doesn’t disclose its financials, but Infogroup Inc.’s ReferenceUSA business database, estimates its sales volume at $21.3 million.
In its release, ViVOtech said it is “well capitalized and has been strongly supported by a broad base of financial and strategic investors.” The company has hired investment bank Morgan Keegan and the law firm of Wilson Sonsini Goodrich & Rosati to assist in its evaluation of the Hypercom assets.
VeriFone had about 56% the approximately $609 million North American POS terminal market held by the three leading terminal makers in 2009, according to estimates from Digital Transactions News sister publication Digital Transactions magazine. France-based Ingenico had about 23% and Hypercom about 20%.
