Hypercom investor supports deal with Ingenico

By Lisa Kerner

Charlotte, N.C., Feb. 13 - Hypercom, Inc. investor RLR Capital Partners, LP urged the company to negotiate a deal with Ingenico SA and possibly forego the acquisition of Thales SA's e-Transactions business.

In negotiating a deal with Ingenico, RLR asked the board to "establish certainty of near-term closing, clear proof of financing capability and a value that appropriately rewards shareholders."

According to RLR, shareholders should be rewarded for:

• The significant product and operating cost synergies that Ingenico would enjoy;

• The revenue opportunity that Ingenico would have as a result of acquiring Hypercom's growing product pipeline, resurgent multi-lane business and strong presence in the U.S. banking market;

• Costs associated with terminating the agreement with Thales, including the $10 million deposit, and reasonable associated fees; and

• The opportunity foregone by not consummating the e-Transactions acquisition.

RLR made its request in a Feb. 13 letter to Hypercom board chairman Norman Stout that was included in a schedule 13D filing with the Securities and Exchange Commission.

The investor and RLR Focus Master Fund, LP, beneficially own some 3.66 million, or 6.9%, of the company's outstanding shares, making them among the largest shareholders of Hypercom.

RLR had been supportive of the Thales transaction, as it would result in a higher valuation for Hypercom, but now believes the Ingenico deal "must be pursued for the benefit of all shareholders," the investor's letter said.

As previously reported, Ingenico proposed acquiring Hypercom for $6.25 per share.

On Dec. 20, Hypercom announced it provided Thales with a binding offer to acquire its e-Transactions business line for $120 million in cash.

Hypercom announced it would consider Ingenico's proposal but would also continue moving forward on the company's planned acquisition of e-Transactions business.

Thales, in a letter to Hypercom, called Ingenico's actions a "transparent attempt" by the competitor to disrupt "the beneficial transaction between Hypercom and Thales."

Ingenico's interest in Hypercom has caused delays as well as expense to Thales.

As a result, Thales is requiring Hypercom to execute and deliver a share purchase agreement with Thales before 10 p.m. ET on Feb. 13 or risk the losing the deal as well as its $10 million deposit.

Ingenico is a Puteaux-Cedex, France-based maker of payment processing terminals.

Thales e-Transactions delivers solutions to simplify and secure electronic card transactions. The company has offices in France, Belgium, Germany, Spain, Sweden and the United Kingdom.

Hypercom is a Phoenix electronic payment products manufacturer.

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