The completion of the acquisition of Israeli retail software maker Lipman Electronics Engineering (Nasdaq: LPMA; TASE: LPMA) by US rival VeriFone Holdings Inc. (NYSE: PAY) faces further delay after the two companies jointly announced that they had received a request for additional information (a "second request") from the United States Department of Justice in connection with VeriFone's pending acquisition of Lipman. VeriFone announced two and a half months ago that it would acquired Lipman for $793 million in cash and shares. Both companies operate in the electronic credit service sector. Lipman develops, manufactures and markets a variety of handheld, wireless and landline POS terminals, electronic cash registers, retail ATM units, PIN pads and smart card readers, as well as integrated PIN and smart card ("Chip & PIN") solutions.
VeriFone is considered a global leader in secure electronic payment technologies. The company manufactures devices for credit, smart card, and check verification. The acquisition of Lipman is expected to increase its competitive edge, and make it, at least, the second largest company in most of its niche markets. Lipman is expected to contribute to VeriFone’s efforts to enter markets in countries such as Turkey, Brazil, Spain, and the UK.
The companies said that the second request would extend the initial waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. VeriFone and Lipman are in the process of gathering information to respond promptly to the second request and intend to work closely with the Justice Department as it conducts its review.
VeriFone said it expected that the companies would hold meetings of their shareholders during September and intended to continue to work toward completing the transaction during VeriFone's fourth fiscal quarter ending October 31, 2006.
The announcement undermined investors’ confidence in both stocks. Lipman fell 2.6% on Friday and is currently trading at 7% below its price at the time of the announcement of the deal, while VeriFone dipped 4%, and currently has a market cap of $1.8 billion.
Published by Globes [online], Israel business news - www.globes.co.il - on June 25, 2006
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