VeriFone Systems, Inc. (PAY) has signed a definitive agreement with Nordic Capital Fund V to acquire European-based Point for approximately €600 million or $824 million. VeriFone will also retire Point’s debt of approximately €170 million.
Management expects to close the acquisition by the end of 2011. The transaction is expected to be accretive to the bottom-line by $0.08 – $0.10 in fiscal 2012 and by $0.30 – $0.35 in fiscal 2013.
VeriFone expects the acquisition to add approximately $260 million to the top-line in the first year. The acquisition is also expected to be immediately accretive to gross margins, operating margins and growth rates. VeriFone expects total services revenue to exceed 30% of total sales in fiscal 2012 and 50% by fiscal 2015.
The company will provide detailed guidance on December 14, 2011 along with its earnings conference call. J.P. Morgan (JPM), Bank of America (BAC), Wells Fargo (WFC), Barclays PLC (BCS) and Royal Bank of Canada (RY) have agreed to provide $1.6 billion to finance the acquisition and refinance VeriFone's existing debt of $0.5 billion and allow it to maintain ample liquidity post the acquisition.
Based in Stockholm, Point provides payment and gateway services and solutions for retailers in Northern Europe. Founded in 1988, the company has operations in 11 Northern European countries and currently serves a captive network with over 475,000 merchants. Nordic Capital acquired Point in 2004.
Point offers retailers a full range of services and solutions, including point-of-sale technology and support, gateway services, card encryption services, and multi-channel e-commerce processing. VeriFone plans to extend the Point platform throughout the European region and other parts of the world as well.
Earlier, VeriFone Systems acquired Global Bay Mobile Technologies, which provides next generation mobile retail solutions. Management expects that the acquisition will enable the company to bring the power of mobile into the world of retail and payments, extending new smartphone – and tablet-based shopping and payment experiences to retail organizations. The company did not disclose other terms of the transaction.
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.
We currently have a Neutral recommendation on VeriFone. In the short-run, we have a Zacks #1 Rank on the stock, which translates into a short-term rating of Strong Buy.
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