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Issue 010502- Table of Contents New Kid on the Conversion Block Process the Payment... Good Boy! I Find Individuals Utterly Fascinating
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Lead Story: HP Sells VeriFone G
ores Technology Group (GTG), a privately held international acquisition and management company, is buying VeriFone from Hewlett-Packard Company. The deal is for cash, but the purchase price is under wraps.
Gores (pronounced Gore-ez) may be a new name to GS readers, but it's one you should commit to memory. Gores specializes in acquiring high-tech organizations and managing them for growth and profitability. They have acquired 35 high-tech companies that have annual aggregate revenues of more than $2 billion. In an interview with the Green Sheet, Stuart Taylor, director of product marketing at VeriFone, told us that Gores is "in this for the long-term" and "expects to return a considerable profit." This commitment could make VeriFone a tougher competitor within the payments industry.
We asked Taylor what effect the purchase will have on VeriFone's relationships with ISOs. "In the short term, nothing. Generally the feeling is unbelievably positive." In fact, prior to the announcement, there were some rumors circulating that First Data was buying VeriFone. If they, or a competitor, had purchased VeriFone, it would have necessitated merging and cutting jobs. In this case, the management team stays in place and Gores brings new skills to them.
VeriFone will function as a freestanding business and exist in its current form. According to Taylor, "The objective is to grow the business. Gores has an entrepreneurial spirit. If you couple their entrepreneurial style with the fact that they have identified the market as one with growth, it is a positive for the industry."
In fact, Gores performed due diligence on VeriFone, and the payment industry as a whole, and decided there is opportunity for growth, which is good news for the entire industry. Taylor continued, "VeriFone gets to refocus on our core business and core strengths. It is very positive to the industry as a whole, as well as to all our partners."
The mood at Gores is equally positive. Alec Gores, founder and chair of Gores Technology Group, said, "We look at this acquisition as a long-term strategic investment. The company has tremendous potential." Doug Bergeron, Group President at Gores Technology Group, added, "We are confidant that, working with VeriFone management, we can capitalize on its strengths and maximize its potential for growth. VeriFone has solid channel, partner and certification relationships and is already well established in key vertical segments such as financial retail, petroleum/convenience store, multi-lane retail and government-education-medical."
Of course, the purchase begs the question, "What wasn't working at HP?" John Brennan, HP vice president, Strategy and Corporate Development, said, "This move will enable HP to put greater focus on core competencies related to service-centric computing and providing solutions for an always-on internet infrastructure." Taylor told us, "We have been a very small percentage of their [HP's] revenues. It is a matter of being a small, non- strategic component of their portfolio." What is boils down to is that VeriFone did not fit in with HP's overall strategy and they needed to focus on their core business.
The deal is expected to close by the end of June. For more information visit www.gores.com or www.verifone.com.
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