Hypercom Announces Plans

Hypercom today announced that it has entered into exclusive negotiations with Thales SA to acquire the e-Transactions business line of Thales. The e-Transactions business line of Thales is a leading provider of secure card payment solutions in France, Germany, the United Kingdom, Spain, Belgium and Sweden, and currently is a profitable business line of Thales Group’s Security Solutions & Services Division, with unaudited proforma, consolidated revenues for the first three quarters of 2007 of €104 million (US$142 million at an exchange rate of approximately 1.36 Euros to the Dollar). The proposed business combination would represent the third largest global provider of electronic payment solutions and services.

The parties contemplate the execution of a fully negotiated share purchase agreement wherein Hypercom would purchase the e-Transaction business line of Thales for $120 million in cash with a potential earn out of up to an additional $30 million based upon the combined companies’ performance in 2008. Hypercom provided Thales with a binding offer on these terms.

Hypercom plans to finance the transaction with $60 million of the Company’s existing cash on hand, combined with a $60 million investment from Francisco Partners. Under the terms of this financing, Francisco Partners would provide a Senior Credit Facility of $60 million and be granted a warrant to purchase approximately 10.544 million shares of Hypercom common stock at $5.00 per share.

“The e-Transactions business line of Thales is focused on high security electronic transaction solutions and is complementary in many ways, providing additional revenue with cost and technology synergies which we believe is a financially and operationally compelling combination,” said Philippe Tartavull, Chief Executive Officer and President, Hypercom Corporation. “The combination is expected to considerably strengthen our footprint in Western Europe, provide additional talented people to our global team, increase our economies of scale, deepen and diversify or R&D efforts, all of which would allow us to more quickly build market share while driving significant operating margin improvement.”

“Francisco Partners is excited about investing in Hypercom. We expect this to be an accretive and transformational acquisition that will drive long term growth and profitability. I believe that this acquisition will enhance Hypercom's position in key European markets while offering increased scale to address the fast-growing developing markets in Asia and Latin America,” said Keith Geeslin, Partner, Francisco Partners.