Are Verifone Shareholders Getting Enough in the Merger?

Technology

Published: April 10, 2018 11:29 am

Last Updated: January 12, 2020 1:35 am

Verifone Systems Inc. (NYSE: PAY) saw its shares skyrocket after news that the company would be acquired by Francisco Partners. Ultimately, this will make Verifone a privately held company. But are investors getting their money’s worth for this deal?

Note that this merger includes a “go-shop” period through May 24 in which Verifone can potentially find or entertain a better offer.

Under the terms of the agreement, Verifone stockholders will receive $23.04 in cash for each share of Verifone common stock held, representing a premium of roughly 54% to the closing price of $15.00 on April 9.

Looking at the 50-day and 200-day moving averages of $17.11 and $18.44, respectively, shareholders are getting premiums of 34.7% and 24.9%. And if we look back a couple years, this stock was valued around $35 per share. It reached as high as $55 in 2011.

The Verifone board of directors has unanimously approved the definitive agreement and recommends that Verifone stockholders vote in favor of the transaction.

The transaction is expected to close during the third calendar quarter of 2018, subject to customary closing conditions, including regulatory approvals.

Paul Galant, CEO of Verifone, commented:

We are pleased to reach this agreement with Francisco Partners. This transaction delivers significant cash value to our stockholders and provides compelling benefits for our clients. We believe this transaction reflects the progress we have made executing our transformation from a terminal sales company to a payments and commerce solutions provider. With Francisco Partners’ resources, expertise and track-record growing global technology businesses, we are confident that we will be better positioned to serve the needs of our clients around the globe.

Shares of Verifone were last seen up 52% at $22.81, with a consensus analyst price target of $20.64 and a 52-week trading range of $14.90 to $22.86.