November 3, 2015
Visa Inc. has recently announced that it would acquire its former European arm Visa Europe, for as much as €21.2 billion ($23.4 billion) in cash and stock—an agreement that would bring Visa's global operations under one roof.
The transaction includes an upfront consideration of €16.5 billion with the potential for an additional earn-out of up to €4.7 billion ($5.18 billion) payable following the fourth anniversary of closing, for a total value of up to €21.2 billion. The upfront consideration comprises €11.5 billion ($12.68 billion) of cash and preferred stock convertible into Visa Inc. class A common stock valued at €5 billion ($5.51 billion).
Visa Inc. and Visa Europe were part of the same umbrella company called Visa International Service Association for many years. Things changed in 2007 when Visa's US operations began moving from a bank-owned cooperative to a publicly traded entity. Visa's other operations globally united under the name Visa Inc., leaving Visa Europe as a separate entity.
The agreement would help the combined business to help accelerate the transition from cash to electronic payments throughout Europe. As per the company, 37% of European personal-consumption spending still occurs via cash and checks. This seems to look like a big opportunity for the company.
We are very excited about unifying Visa into a single global company with unmatched scale, technology and services, Charles W. Scharf, Chief Executive Officer at Visa Inc., said in the press release. This transaction is beneficial for financial institutions, acquirers, merchants, cardholders and other partners as well as for our employees and shareholders. The Visa Europe team has done a tremendous job building a leading payments system that is trusted and respected across Europe, and together we will bring the power of electronic payments to more people, in more places, than ever before.
Visa is a great global brand with a proud history and exciting future. Visa Europe has delivered impressive results over recent years and the board believes that it is the right time to reunite these two very healthy businesses under common management. The deal will unlock significant value for members both through the consideration paid and because the board believes a combined Visa will be better positioned to serve the needs of customers going forward. We are confident that Visa Inc. is committed to long-term investment and development of the European business, said Gary Hoffman, Chairman of the Visa Europe Board.
Nicolas Huss, CEO Visa Europe, added, "Integrating into one global business will ensure we have the financial strength and operational scale necessary to accelerate the next generation of payments throughout Europe. This will enable us to deliver world-class solutions to our clients and open up exciting professional opportunities for our employees."
About Visa Inc.:
Visa Inc. (NYSE: V) is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. It operates one of the world's most advanced processing networks—VisaNet—that is capable of handling more than 65,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa's innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, pay ahead of time with prepaid or pay later with credit products. For more information, visit.
About Visa Europe:
Visa Europe is a payments technology business owned and operated by member banks and other payment service providers from 38 countries. Its members are responsible for issuing cards, signing up retailers and deciding cardholder and retailer fees. Visa Europe is the largest transaction processor in Europe, responsible for processing more than 18 billion transactions annually. There are more than 500 million Visa cards in Europe, and €1 in every €6 spent in Europe is on a Visa card. Since 2004, Visa Europe has been operating independently of Visa Inc. and incorporated in the UK, with an exclusive, irrevocable and perpetual license in Europe. Both companies work in partnership to enable global Visa payments in more than 200 countries and territories. For more information, visit.