VeriFone Systems Inc. (PAY) reached a settlement with the U.S. Justice Department that will let it acquire rival Hypercom Corp. on the condition it sells Hypercom’s U.S. point-of-sale terminal business.
An agreement with the Justice Department filed today specifies that private equity firm Gores Group LLC will buy the terminals business. The U.S. sued to block the $485 million deal on concerns that combining VeriFone and Hypercom would hinder competition in the market for the retail checkout terminals, the Justice Department said in an e-mailed statement.
The proposed divestment “ensures that competition will remain in point-of-sale terminals markets,” Christine Varney, head of the Justice Department’s Antitrust Division, said in the statement. The sale “will create an independent and significant competitor in the United States, both right now and into the future,” she said.
Businesses use point-of-sale terminals to accept electronic payments such as credit and debit cards. VeriFone, based in San Jose, California, is the second-largest maker of electronic- payment equipment. Hypercom, based in Scottsdale, Arizona, is No. 3, according to a Justice Department filing made with the settlement.
Together, the two companies control more than 60 percent of the U.S. market for terminals used by the largest retailers, according to the Justice Department. Ingenico SA, based in France, is the biggest maker of card-payment terminals.
The Justice Department in May blocked a proposed agreement by VeriFone and Hypercom to sell Hypercom’s U.S. point-of-sale business to Ingenico, saying it didn’t fix the competitive concerns with the merger.
VeriFone will retain Hypercom’s point-of-sale equipment business outside the U.S. The acquisition will help VeriFone expand in the emerging market for payments made with mobile phones by giving it a bigger international presence in retail stores, and the opportunity to install more terminals able to accept mobile-phone payments abroad.
VeriFone is a partner of Internet-search giant Google Inc. (GOOG), which is starting a mobile-payment service based on a technology called near field communication. The total value of mobile payments for digital and physical goods, money transfers and near field communication transactions will reach $670 billion by 2015, compared with $240 billion this year, U.K.-based consultant Juniper Research said last month.
VeriFone’s shares declined $2.47, or 6 percent, to $38.52 at 4 p.m. on the New York Stock Exchange.
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