Tech-focused private equity firm Francisco Partners is leading a take-private deal of Verifone Systems Inc. (NYSE: PAY), a world leader in payment and commerce solutions. The investor group, which includes British Columbia Investment Management Corp., one of Canada's largest institutional investors, is paying $23.04 per share in cash, representing a total consideration of approximately $3.4 billion, which includes Verifone’s net debt.
"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," said Verifone CEO Paul Galant in a statement. "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.”
“This investment builds on the strength of our financial technology, systems and software franchises,” commented Dipanjan “DJ” Deb, co-founder and CEO of Francisco Partners. “Verifone will receive the highest focus of Francisco Partners as we support its continued growth and transformation in an increasingly software-centric world.”
Francisco Partners has raised more than $14 billion in committed capital and has invested in more than 200 technology companies since its founding in 1999. In 2016, the San Francisco firm bought Dell Inc.'s software group for $2.4 billion, subsequently carving out Quest Software and SonicWall. Earlier in April, the firm announced it is buying Bomgar, a seller of secure access software for computer systems and devices, from Thoma Bravo.
“Verifone continues to build compelling and impressive products and technology and has attractive long-term growth prospects,” said Peter Christodoulo, partner at Francisco Partners. “We are excited to become investors and stewards of this important platform in the global payments and commerce ecosystem.”
“Verifone’s transformation from a hardware provider to a best-in-class payments and commerce solutions provider is just beginning,” added Jason Brein, partner at Francisco Partners. “We look forward to supporting the company as it continues its evolution.”
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 approximately 54 percent to the company’s closing share price of $15.00 on April 9. The Verifone board of directors has unanimously approved the definitive agreement and recommends that Verifone stockholders vote in favor of the transaction. Upon completion of the transaction, Verifone will become a privately held company.
The Verifone transaction is not subject to a financing condition and is expected to close during the third calendar quarter of 2018, subject to customary closing conditions, including receipt of stockholder and regulatory approvals. The merger agreement includes a “go-shop” period, which permits Verifone’s board and advisors to actively initiate, solicit, encourage, and potentially enter into negotiations with parties that make alternative acquisition proposals through May 24. There can be no assurance that this process will result in a superior proposal, and Verifone does not intend to disclose developments with respect to the solicitation process unless and until the board makes a determination requiring further disclosure.
Credit Suisse, Barclays and Royal Bank of Canada are acting as financial advisors, and Kirkland & Ellis LLP is serving as legal advisor to the Francisco Partners-led investor group. Credit Suisse, Barclays and Royal Bank of Canada have also provided committed debt financing for the transaction. Qatalyst Partners is acting as financial advisor to Verifone, and Sullivan & Cromwell LLP is serving as Verifone’s legal advisor.