DoJ Sues VeriFone Over Hypercom Buy, Ingenico Uncertain About U.S. Asset Purchase

by Mercator Advisory Group 0

Filing suit in US District Court in Washington DC last week, the US Department of Justice is invoking antitrust against card terminal manufacturer VeriFone Systems. The suit centers over their six-month old planned acquisition of the entirety of competitor Hypercom and simultaneous divestiture of Hypercom’s U.S. assets to the two companies’ only other major competitor, France-based Ingenico.

The entire $485 million deal is now in jeopardy even if the antitrust investigation finds no violations, since the potential delay may render Ingenico unable to close the secondary transaction, the company announced in astatement released last Thursday.

VeriFone and Hypercom said in their own statement that they would explore divestiture of the Hypercom assets in the US to an alternative buyer. ViVOtech made overtures along those lines in late March.

Finextra has a nice story:

The DoJ has not been appeased, … saying the acquisition would “substantially lessen competition” in the US POS market “resulting in higher prices and reduced innovation, quality, product variety, and service”.

Between them, VeriFone and Hypercom together control more than 60% of the US market for POS terminals used by the largest retailers, says the DoJ.

The planned sale of Hypercom’s US business to Ingenico does not resolve the antitrust concerns, says the DoJ, because the assets are to be sold to another significant player in the market and does not create a new, independent, long-term competitor.

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