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April 24, 1997updated 05 Sep 2016 1:09pm

HP EYES THE NET AS IT SWOOPS TO BUY VERIFONE IN STOCK SWAP

By CBR Staff Writer

Hewlett-Packard Co is not going to sit back and let Microsoft Corp to snap up all the internet-related plums, and yesterday it announced agreement to acquire VeriFone Inc, the Redwood City, California company that has been a long-time manufacturer of point-of-sale and other transaction terminals but which has of late been one of the leaders in the rush to come up with mechanisms for secure internet financial transactions. The deal rushes HP into the point-of-sale terminal business where NCR Corp, ICL Plc, Siemens Nixdorf Informationssysteme AG and IBM Corp are the leading players these days. But all the interest on the call announcing the acquisition was internet-related, even though it only contributed about $1m to VeriFone revenues first quarter out of $116m in total. HP is paying a whopping $1.18bn in a one-for-one share exchange for VeriFone, which did $40m net on sales of $472m last year. VeriFone is big in the market for card- swipe terminals, which would have a role in HP’s plans for smart cards, which it announced last month. HP plans to incorporate its ImagineCard smart card technology into its personal computers eventually. VeriFone will also help get HP into still more financial services companies for its servers. VeriFone claims it handled around $520bn of the more than $800bn electronic transactions in the US last year. The 17 year-old company will be operated as an independent unit of HP as part of a new e-commerce unit inside the Enterprise Systems Business Unit, headed by Glenn Osaka and VeriFone chairman, president, and CEO Hatim Tyabji. He will report to HP’s head of its computer organization Rick Belluzzo. VeriFone shares jumped $17.125 or 57% to close at $47.25. HP’s shares predictably dropped, closing down $1.125 at $49.375. The deal was struck on HP’s closing price on Tuesday of $50.50. VeriFone, and therefore now HP, also has a small stake in micropayments company CyberCash Inc, which was started by VeriFone’s founder, William Melton and where Melton is the chief executive. The deal is expected to close mid-summer subject to shareholder approval and analysts reckon it will be slightly earnings-dilutive to HP, but Belluzzo was tight-lipped on financial predictions.

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