Verifone Acquires Semtek - Analyst Blog

VeriFone Systems, Inc. (PAY) announced that it has acquired encryption leader Semtek for $18 million in a move to deliver end-to-end encryption solutions. In October 2007, VeriFone made an initial equity investment in Semtek. In April 2008, VeriFone introduced VeriShield Protect, the first commercial offering of end-to-end encryption for payments, which incorporated Semtek technology.

VeriShield Protect has since been implemented across VeriFone's product line. This patented technology encrypts card holder information at the exact instant of acceptance, inside a secure, trusted device and keeps that data encrypted throughout an enterprise to ensure protection of information even in the event of a security breach.

The acquisition is effective immediately. Semtek will be absorbed into VeriFone's Integrated Systems organization. The acquisition will enable VeriFone to integrate the development, sales, implementation and support of end-to-end encryption solutions into the existing VeriFone organization to serve customers better.

VeriFone continues to strengthen its product portfolio with strategic acquisitions. Last week, VeriFone announced its acquisition of the assets of WAY Systems Inc. for $6 million. WAY Systems provides mobile Point of Sale (POS) solutions and gateway services for mobile merchants and has built up a customer base of more than 25,000 mobile merchants in the last five years who use the company's compact mobile POS technology and gateway services.

VeriFone expects that WAY's intellectual property and reseller relationships will strengthen its mobile payment solutions business. The acquisition will help VeriFone expand its PAYware Connect Gateway infrastructure.

The acquisition will not have a material impact on VeriFone's financial results. VeriFone will offer support for all existing WAY mobile systems through its extensive mobile portfolio, including PAYware Mobile and VX Evolution secure payment systems.