Verifone in talks to acquire Lipman at $800-900m value
The price reflects a premium of 20-30% over electronic payment technology company Lipman’s current share price.
Golan Fridenfeld 22 Mar 06 20:04
Sources inform ''Globes'' that US-based Verifone is holding talks for the acquisition of its Israeli rival Lipman Electronics Engineering (Nasdaq: LPMA; TASE: LPMA), at a premium of 20-30% over Lipman’s current price, which will value it at $800-900 million. Verifone, which has a market cap of $2 billion, provides electronic credit card clearance services, a similar line of business to that of Lipman. The merger, should it go through, will merge Lipman’s business with Verifone's. Lipman is believed to have held talks towards the end of 2005 with three of its competitors, Verifone, Hypercom, and Ingenico, about a possible sale or merger, which means such a move has been in the offing for at least six months.
Lipman's two major Israeli shareholders are likely to make profit totaling tens of millions of dollars from a sale of the company. These are First Israel Mezzanine Investors Fund, managed by Ishay Davidi, and Mivtach Shamir, owned by Meir Shamir. Mivtach Shamir owns a 13.1% stake in Lipman (according to the most recent document to be submitted to the stock market in the US), worth $90 million at market price. First Israel Mezzanine has, as of present, a 5.1% stake in Lipman, worth $34 million. Three other foreign investment funds also have holdings in Lipman: Zend International, which owns 6.8%, Jana Partners, which owns 6.8%, and a fund named Cardinal Capital, which has a 6.1% stake. The company’s other shareholders are its founders Aharon and Rami Lipman, who own a 4% stake worth NIS 135 million. Mivtach Shamir’s financial reports for 2004 list the company’s holding in Lipman at a company value of $220 million, which means Mivtach will make a substantial gain on the sale should it be transacted at the reported price.
Lipman had a tough year in 2005, which included two profit warnings, (principally as a result of the acquisition of UK company Dione). The company ended 2005 with sales turnover of $235.4 million, reflecting a 30% increase on revenue in 2004. The company expects revenue in 2006 of $265-275 million, reflecting an expected growth rate of 15%. Net profit for 2006 is expected to reach $38-41 million.
A spokesperson for Lipman said, “We have a longstanding policy of not commenting on rumors about our relations with customers and suppliers, or about mergers and acqusitions."
Published by Globes [online], Israel business news - www.globes.co.il - on March 22, 2006
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