Under the terms of the deal, unanimously approved by both boards, Hypercom shareholders will receive a fixed ratio of 0.23 shares of VeriFone common stock for each Hypercom one, valued at around $7.32 based on the closing price yesterday. VeriFone will also assume outstanding warrants and stock options in the transaction.

The agreement comes after Hypercom aggressively rejected a £337 million, all-cash, hostile bid from VeriFone in September, accusing its rival of significantly undervaluing the company.

In response to the bid, it adopted a stockholder rights plan to fight off VeriFone and hired UBS and DLA Piper as financial and legal advisors.

Said a statement at the time: "Hypercom believes that VeriFone's proposal is opportunistic and intended to disrupt its business, which has successfully taken market share from VeriFone in several markets."

Now, the new bid has been backed by Hypercom's board and is expected to close in the second half of 2011, subject to shareholder approval.

Hypercom says it has increased revenue from almost $290 million to approximately $450 million over the last three years but it is the company's 23% market share in Europe that has attracted VeriFone. Only last month it entered into exclusive talks to buy the point-of-sale business of Europe's Gemalto as part of a wider strategic partnership between the two firms.

VeriFone CEO Douglas Bergeron, CEO, says: "Hypercom has established itself in a number of important European markets, and this acquisition is an excellent and complementary way for us to accelerate our overseas growth, increase innovation and build value for our shareholders."