Private Equity Pays Up for Verifone
The price paid reflects optimism that Verifone will become a best-in-class solutions provider rather than the harsh realities of the payments hardware business.
VeriFone (PAY) agreed to be acquired by an investment group including private equity firm Francisco Partners and British Columbia Investment Management Corporation for $23.04, a 54% premium to the company's last closing price, which approximated our $15 fair value estimate. We currently see no reason why the deal should not close, and we are immediately raising our fair value estimate to $23 per share. A representative of Francisco Partners commented that, "Verifone’s transformation from a hardware provider to a best-in-class payments and commerce solutions provider is just beginning." We agree that Verifone's transformation is in the early stages, but believe the price paid reflects optimism that the company will become a best-in-class solutions provider rather than the harsh realities of the payments hardware business. The transaction is expected to close in the third quarter, and Verifone is able to solicit additional offers until May 24, 2018.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.
Jim Sinegal does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.