Hypercom’s board rejected San Jose, California-based VeriFone’s $5.25-a-share bid after the largest maker of electronic-payment equipment made its offer public Sept. 24. Hypercom sued VeriFone in Delaware Chancery Court in Wilmington for violating a confidentiality agreement between the companies.
“Public disclosure of the fact that Hypercom may be subject to an acquisition will irreparably damage Hypercom’s ability to attract and retain qualified employees,” Hypercom’s lawyers said in the Sept. 23 suit. The complaint was filed under seal and made public yesterday at the request of Bloomberg News.
VeriFone, best known for having its credit-card payment devices in New York City taxi cabs, wants Hypercom in order to expand its European business, analysts say. The offer was 24 percent higher than Hypercom’s closing stock price on Sept. 23.
VeriFone spokesman Pete Bartolik said in a telephone interview he wasn’t familiar with the suit and couldn’t immediately comment. Pete Schuddekopf, a Hypercom spokesman, didn’t immediately return a call for comment.
Hypercom fell 9 cents, or more than 1.4 percent, to $6.20 at 1:52 p.m. in New York Stock Exchange composite trading. VeriFone rose 58 cents, or 2.1 percent, to $27.98 on the NYSE.
Hypercom, based in Scottsdale, Arizona, has been an acquisition target in the past. Ingenico SA, a maker of payment terminals, offered $6.25 a share in cash in February 2008 for the electronic-payment software producer.
Ingenico, based in Neuilly-sur-Seine, France, dropped its bid later that month after Hypercom pushed ahead with a purchase of a unit of Thales SA. That deal barred Hypercom from becoming involved in any other buyouts, Ingenico officials said.
VeriFone executives first approached Hypercom about a merger in September 2009, according to court filings. Hypercom agreed to discuss a buyout as long as the talks remained confidential, the suit said.
Last month, VeriFone officials sent a letter to Hypercom executives threatening to take their offer to Hypercom’s shareholders, the suit said. The letter came after Hypercom rejected VeriFone’s earlier buyout bid.
Making the offer public violated the confidentiality agreement between the two companies, Hypercom’s lawyers contend in court filings. The confidentiality provisions were supposed to be in place until 2011, according to the suit.
Hypercom is asking Chancery Judge J. Travis Laster to bar VeriFone from pushing ahead with its “hostile offer,” according to the suit.
If Laster allows the offer to proceed, Hypercom’s suppliers may persuaded to cut off the flow of components needed to produce the company’s products or redirect them to competitors, the company’s lawyers said.
The case is Hypercom Corp. v. VeriFone Systems Inc., 5845, Delaware Chancery Court (Wilmington).
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