Ingenico To Buy Hypercom Assets, Installs New North American Boss

Ingenico S.A. will buy part of point-of-sale terminal maker Hypercom Corp.’s U.S. assets as VeriFone Systems Inc. prepares to complete its acquisition of Hypercom under a deal the companies announced Monday. France-based Ingenico also installed the head of its Australian unit, Thierry Denis, as its new North American president.

Ingenico will pay $54 million in cash for the U.S. payment business of Scottsdale, Ariz.-based Hypercom, though the final price is subject to adjustments. The businesses to be sold generated $61 million in revenues last year and include, besides Hypercom’s line of POS terminals, its minority interest in the HBNet gateway service. San Jose, Calif.-based VeriFone is buying Hypercom mainly for its strong European business but in the U.S. will retain Hypercom’s MegaNAC unit that provides network access controllers.

Hypercom, No. 3 in the U.S. market after VeriFone and Ingenico, will bring to Atlanta-based Ingenico North America more relationships with independent sales organizations and other resellers that reach small and mid-sized merchants. Ingenico’s traditional strength is with large, multilane retailers. Boosting its presence with ISOs, who serve millions of merchants, is an Ingenico goal “knowing Hypercom’s incredible relationships with the processing world in the U.S.,” says Svy Nekrasas, Ingenico vice president of marketing for North America.

“It gives them [Ingenico] an established base of customers and it gives them an established product line,” says merchant-acquiring industry researcher and consultant Paul R. Martaus, president of Mountain Home, Ark.-based Martaus & Associates.

With the sale, Ingenico also stands to gain a wider prospective customer base for the Telium platform that it’s bringing to North America, a platform Nekrasas says is much more flexible than Ingenico’s older Unicapt 32 (U32) platform. Ingenico first announced its plans for Telium in 2009. Martaus says he believes merchants on the older system lose all the specialized coding they’ve inputted into their Ingenico equipment if they want to upgrade. “You have to rewrite every line of code that you’ve customized,” he says. Nekrasas says that’s “a fairly accurate statement,” but adds that Telium will correct the problem. “That technology is just way superior to U32,” he says, noting that Telium supports high-definition video. “We had to bring something that had more power, more juice.”

News of the deal comes just a few days after specialty payment hardware and software maker ViVOtech Inc. announced that it was interested in Hypercom’s U.S. assets as a way to boost its plans for near-field communication (NFC) contactless payments. Neither VeriFone nor Hypercom commented about ViVOtech’s possible bid. Reflecting ViVOtech’s aspirations, Ingenico chief executive Philippe Lazare said in a news release that Hypercom would accelerate Ingenico’s plans to develop NFC mobile payments.

Meanwhile, Denis is now at the helm of Ingenico North America after more than 20 years with Ingenico, 17 of them in Australia and Southeast Asia. Denis, who has a technical background ranging from research and development to software, became managing director of that region in 2006. He replaces Chris Justice, who remains with the company in an advisory capacity, according to Nekrasas. Ingenico announced the leadership change in the same news release it issued announcing the Hypercom deal. “In order to facilitate the integration of the two business operations, Thierry Denis has been appointed president of Ingenico North America, reporting to the CEO” [Lazare], the release says. Nekrasas would not elaborate, describing the change as “a corporate move.”

The sale to Ingenico is expected to close just before VeriFone closes on the Hypercom acquisition, which the companies expect in the second half.

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