HYC Hypercom Corp

VeriFone Systems Inc. (PAY) in an effort to expand in developing economy recently entered into an agreement to acquire South Africa-based Destiny Electronic Commerce (Pty) Ltd. The financial terms were not disclosed.

Destiny Electronic Commerce provides secure payment technologies, services and solutions at the point of sale for Sub-Saharan Africa and the Indian Ocean Islands.

With this acquisition, management expects to expand its footprint in South Africa, having sound growth prospects of a developing economy and exceptional infrastructure. Further, this acquisition will provide an opportunity to the company to expand in a potential $100 million market.

The transaction is expected to close this summer. Consequently, Destiny Electronic Commerce’s talented management team and 160 employees possessing payments expertise will join VeriFone.

Last year, VeriFone announced that it would acquire its rival Hypercom Corporation (HYC) for approximately $7.32 per share or $485 million, including net debt assumed by VeriFone. As of September 30, 2010, Hypercom had a long-term debt of $61.7 million.

According to the terms of the agreement, Hypercom shareholders will obtain a fixed ratio of 0.23 shares of VeriFone common stock for each Hypercom share they own. Additionally, VeriFone will acquire Hypercom’s outstanding warrants and stock options in the transaction.

The transaction is expected to close in the second half of 2011 and is anticipated to be accretive to VeriFone during the first twelve months of combined operations, excluding one-time costs.

The company expects to expand its operations in Continental Europe by leveraging Hypercom’s position in European markets. Furthermore, VeriFone had declared earlier that the acquisition would eliminate product overlap, administrative costs and sales expenses in many markets, which would ultimately drive significant operating synergies.

Based in San Jose, California, VeriFone provides solutions for electronic payment systems for the financial, retail, hospitality, petroleum, transportation, government and health care vertical markets.

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