VeriFone to Buy Lipman for $793 Million

Firm looking to lead the electronic payments sector

Omer Sharvit

Apr 10, 2006

Omer Sharvit

Apr 10, 2006

VeriFone announced today it reached a cash and stock deal worth $793 million to acquire rival electronic payment systems maker Lipman Electronic Engineering Ltd. (TASE: LPMA) After the deal, VeriFone plans on being the leading provider of electronic payment services.

Under terms of the deal, which VeriFone expects to close by October 31, the end of VeriFones fiscal year.

Lipman shareholders will have three options to choose from: receiving for each Lipman share 0.5 shares of VeriFone common stock and $14.30 in cash, adjusted for a special dividend; or $29.07 per share in cash; or 0.9844 shares of VeriFone for each Lipman share.

The amount of the special dividend, yet to be finalized, will likely exceed $23 million, VeriFone said.
Verifone will allocate $382 million and 13.3 million shares for the deal.

Lipman?s CEO, Isaac Angel said: ?Since its founding in 1974, Lipman has based itself on innovation and technology leadership in wireless payments.?

VeriFone said it expects the transaction to be accretive to analysts' current estimates for its fiscal 2007 net income.

The deal is subject to approval by shareholders of both companies and customary regulatory approvals.
Following completion of the acquisition, VeriFone said it will continue to trade on the New York Stock Exchange and will be dual listed on the Tel Aviv Stock Exchange.

Shares of Israel-based Lipman rose nearly 6 percent in Tel Aviv one day last month on a report that it was in talks to be acquired by VeriFone. Lipman neither confirmed nor denied the report at the time.
In its fiscal year ended October 31, 2005, VeriFone reported net revenue of $485.4 million. Lipman's revenue in the fiscal year ended December 31, 2005 was $235.4 million.

Lehman Brothers acted as financial advisor to VeriFone on the acquisition. Merrill Lynch acted as financial advisor to Lipman.

One of the biggest beneficiaries of the deal will be Mivtach Shamir, which holds 12% of Lipman stock. The deal will give the firm a NIS 288 million capital gain, as the shares are valued on Mivtach Shamir's their books at only NIS 150 million.