Pending regulatory approval, Visa Inc. will acquire Visa
Europe, an association owned and operated by about 3,000 member
banks and other payment service providers in 38 European countries. The
deal could be worth up to €21.2 billion (US$23.3 billion), including
earn outs. The deal is not expected to close before the second quarter.
Visa Europe became independent from Visa
Inc. when Visa Inc. listed on the New York Stock Exchange in 2007.
The transaction includes €11.5 billion
in cash, plus preferred stock that’s convertible into Class A shares worth €5
billion and the potential for a €4.7 billion earn-out cash payment if Visa
Europe meets revenue targets for the 16 quarters following the transaction’s closure,
according to Visa Inc.
"It was expected. It’s been long
rumored that they wanted to combine," said MasterCard group head of global
T&E products and solutions Richard Crum. "MasterCard has operated as a
single global company with a single product, network, [and] platform for long
time. ... It’s a great scale and it’s been a great asset for us."
Visa Europe CEO Nicolas Huss said in a
statement, “Integrating into one global business will ensure we have the
financial strength and operational scale necessary to accelerate the next
generation of payments through Europe.”
European clients will have greater access
to such Visa Inc. resources as “innovative technology,” fraud and risk
solutions and its analytics platform, and global clients will gain a more “seamless
experience” in Europe, according to a Visa Inc. statement.
During a conference call with investors,
Visa Inc. CEO Charles Scharf said Visa would make European clients' needs a
priority when allocating its resources. Visa Inc. also will maintain a data
center based in Europe. Its European headquarters will remain in London.
For the fiscal year ending Sept. 30,
Visa Europe reported more than 522.6 million debit, credit and commercial cards
in circulation in Europe and processed more than 18 billion transactions.
Visa Inc. sees opportunity to convert
to card spend the estimated 37 percent of personal expenses, or $3.3 trillion, Europeans
pay with cash and check. It also noted that Europe has been an early adopter of
mobile payments, which are expected to grow more there owing to the widespread
availability of near-field communication technology. “Visa Inc. has
aggressively launched new mobile payment partnerships, platforms and products
that will enable faster growth and adoption of mobile payments in Europe,”
according to Visa Inc.