Strategic Acquisition to Create One Global Company That Further
Extends Visa’s Payment Leadership;
Adds Approximately 3,000 European Issuers, over 500M Card Accounts
and more than €1.5 trillion in Payments Volumes to Visa Inc.
FOSTER CITY, Calif. & LONDON--(BUSINESS WIRE)--
Visa Inc. (NYSE: V) and Visa Europe Ltd. today announced a definitive
agreement for Visa Inc. to acquire Visa Europe, creating a single global
company. The transaction consists of upfront consideration of €16.5
billion with the potential for an additional earn-out of up to €4.7
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 of cash and preferred stock convertible into Visa Inc. class A
common stock valued at €5 billion.1 Both companies’ boards
were unanimous in their support of the transaction. The transaction is
subject to regulatory approvals and is expected to close in Visa Inc.’s
fiscal third quarter of 2016.
As a result of the combination, European clients will have greater
access to Visa Inc.’s scale and resources and global clients will have a
more seamless experience. Additionally, European clients will benefit
from direct access to Visa Inc.’s investments in innovative technology
and differentiated products and services.
The transaction capitalizes on strong growth opportunities in a highly
attractive region. It positions the combined Visa to create value
through increased scale, efficiencies realized by the integration of
both businesses, and benefits related to Visa Europe’s transition from
an association to a for-profit enterprise.
Visa Europe, an association owned and operated by member banks and other
payment service providers, is the payments leader in Europe. At the end
of fiscal full-year 2015, there are more than 500 million Visa cards
issued across Europe. The association is responsible for more than
€1.5 trillion in payments volumes, processes over 18 billion
transactions annually, and partners with approximately 3,000
financial institutions in 38 countries.
“We are very excited about unifying Visa into a single global company
with unmatched scale, technology and services,” said Charles W. Scharf,
chief executive officer, Visa Inc. “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
“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
The transaction will position the combined business to take advantage of
a significant growth opportunity. In Europe an estimated 37 percent, or
USD $3.3 trillion, of personal consumption expenditure is still done via
cash and check. Europe has also been an early adopter of mobile
payments, which analysts predict will see strong growth in the future
given 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. This includes new tokenization
services, support for digital
wallets and wearables, strategic
investments in other enabling technologies, ecommerce
payment capabilities, as well as the opening of several global innovation
In discussing integration plans, Charles W. Scharf commented, “We look
forward to the new integrated Visa, and we are fully committed to
ensuring our efforts in Europe are tailored to meet local market needs.
This includes being responsive to the evolving regulatory landscape,
maintaining a European data center, and partnering with Europe’s growing
payments ecosystem to co-develop locally-relevant products, services and
experiences. This combination strengthens our payments system in Europe,
as together we have even greater financial resources to invest in
technology assets. Finally, we will continue to have a strong local
management team in Europe, with London remaining as headquarters for the
Deal Structure and Terms
Under the terms of the transaction’s definitive agreements, Visa Inc.
will acquire Visa Europe for upfront cash consideration of €11.5 billion
and preferred stock convertible into Visa class A common stock valued at
€5 billion.1 In addition, Visa Europe members could
potentially receive an earn-out cash payment of up to €4.7 billion
including interest for a total transaction value of up to €21.2 billion.
The earn-out will be based on achievement of net revenue targets during
the 16 quarters following the closing of the transaction and will be
payable after the fourth anniversary of the closing. It includes up to
€0.7 billion of interest at a 4% rate, compounded annually.
The transaction will result from the exercise at the time of closing of
a put option. As part of Visa’s 2007 reorganization, Visa Inc. entered
into an agreement granting Visa Europe the put option, which, if
exercised, would require Visa Inc. to purchase all of Visa Europe’s
outstanding capital stock from its owners in accordance with a specified
timetable and for a price determined by a specific formula. In
connection with the transaction announced today, the put option was
amended to reflect the agreed-upon purchase price and timing. If the
transaction is not completed, the put option will revert to its original
The preferred stock will ultimately be convertible into class A common
stock subject to the satisfaction of certain conditions. Similar to Visa
Inc.'s existing class B common stock, the conversion rate will be
reduced in the event that Visa Inc. suffers losses related to certain
covered litigation, relating primarily to the setting of interchange
rates in Visa Europe's territory.
In conjunction with the transaction, Visa Inc. will establish a
long-term capital structure. Visa Inc. intends to issue senior unsecured
debt in an amount ranging between USD $15 and $16 billion in its fiscal
first quarter of 2016, with maturities ranging between 2 and 30 years
depending on market conditions. The proceeds from the debt issuance will
be used to fund the cash consideration and increase the repurchase of
class A common stock outstanding in 2016 and 2017 to offset the effect
of the issuance of preferred stock. Visa Inc.’s initial leverage is
expected to be between 1.4 and 1.5 times gross debt to EBITDA and
long-term leverage at between 1.1 and 1.5 times gross debt to EBITDA,
maintaining flexibility to pursue future growth opportunities. Visa Inc.
expects to maintain current investment credit ratings of A+ / A1.
Visa Inc. expects the transaction to be dilutive to fiscal full-year
2016 adjusted earnings per share in the low single-digit percentage
point range due to a number of factors, including the issuance of the
preferred stock, the timing of share repurchases of class A common
stock, and the issuance of debt relative to the timing of the close.
Benefits from revenue synergies, cost savings, and increased repurchases
of class A common stock will begin to accrue in fiscal full-year 2017,
and Visa Inc. expects the transaction to be accretive to adjusted
earnings per share in that fiscal year in the low single-digit
percentage point range before one time integration costs. Following the
completion of integration, the transaction is expected to be accretive
to adjusted earnings per share in the high single-digit percentage point
range by fiscal full-year 2020.
Upon closing the transaction, Visa Inc. expects one-time transaction
costs of approximately USD $150 million including stamp duties to be
incurred in fiscal full-year 2016. Cumulative integration related costs
are expected to be approximately USD $450 million to $500 million
through the end of fiscal full-year 2020. Approximately USD $200 million
in pre-tax cost savings are expected annually, largely realized by the
end of fiscal full-year 2020.
Greater detail on the terms of the preferred stock, the covered claims,
and related matters can be found in Visa Inc.’s Form 8-K filed today.
Conference Call Details
Visa Inc.’s executive management team will host a conference call at
5:00 a.m. Pacific Time (8:00 a.m. Eastern Time; 1:00 p.m. UK time)
today, Monday, November 2, to discuss the transaction, as well as its
fiscal fourth quarter and full-year 2015 earnings results. The
conference call may be accessed by dialing 888-790-4410 (within the
United States) or 773-756-0127 (international). The conference passcode
is 7974435. A replay of the call will be available until December 1 and
can be accessed by dialing 800-925-1967. The live conference call and
replay, along with supporting materials, can also be accessed through
the Investor Relations section of Visa’s website at www.investor.visa.com.
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. We operate 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,
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 www.visaeurope.com.
This release contains forward-looking statements within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally are identified by words such as
"expects," "intends," "plans," "predicts," "estimates," "may," "will,"
"could," "potential," "ongoing," and other similar expressions. Examples
of forward-looking statements include, but are not limited to,
statements Visa Inc. makes about the expected date of closing of the
acquisition, the potential benefits of the transaction, Visa Inc.’s
clients’ experience; Visa Inc.’s ability to create value, the
transaction’s creation of scale, efficiencies and financial strength,
the nature of the transaction’s financing, Visa Inc.’s plans regarding
the repurchase of its class A common stock, Visa Inc.’s leverage, Visa
Inc.’s ability to pursue future growth opportunities, Visa Inc.’s
investment credit ratings, Visa Inc.’s earnings per share, benefits from
revenue synergies, cost savings, tax savings, transaction costs and
increased repurchases of its class A common stock; and the nature of
current or future litigation.
By their nature, forward-looking statements: (i) speak only as of the
date they are made; (ii) are not statements of historical fact or
guarantees of future performance; and (iii) are subject to risks,
uncertainties, assumptions or changes in circumstances that are
difficult to predict or quantify. Therefore, actual results could differ
materially and adversely from Visa Inc.’s forward-looking statements due
to a variety of factors, including the following: the risk that the
transaction may not be consummated; the risk that Visa Europe’s business
will not be successfully integrated with Visa Inc.'s business; costs
associated with the acquisition; matters arising in connection with the
parties' efforts to comply with and satisfy applicable regulatory
approvals and closing conditions relating to the transaction; the impact
of laws, regulations and marketplace barriers; developments in
litigation and government enforcement, including those affecting
interchange reimbursement fees, antitrust and tax; new lawsuits,
investigations or proceedings, or changes to Visa Inc.’s potential
exposure in connection with pending lawsuits, investigations or
proceedings; economic factors; industry developments, such as
competitive pressure, rapid technological developments and
disintermediation from Visa Inc.’s payments network; system
developments; the loss of organizational effectiveness or key employees;
the failure to integrate other acquisitions successfully or to
effectively develop new products and businesses; natural disasters,
terrorist attacks, military or political conflicts, and public health
emergencies; and various other factors, including those most fully
described in Visa Inc.’s filings with the U.S. Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal year
ended September 30, 2014 and its subsequent reports on Forms 10-Q and
You should not place undue reliance on such statements. Except as
required by law, Visa Inc. does not intend to update or revise any
forward–looking statements as a result of new information, future
developments or otherwise.
This release does not constitute an offer to sell or the solicitation of
an offer to buy any securities. The convertible preferred stock of Visa
Inc. will be issued only pursuant to the terms of the transaction’s
1 At the initial conversion rate, the shares of Visa Inc.
preferred stock issued in the transaction will be convertible into an
aggregate of 78,654,400 shares of class A common stock, valued at
approximately €5.0 billion based on the average trading price of the
class A common stock of $71.68, and the average Euro/Dollar exchange
rate of 1.12750, each for the 30 trading days ended October 19, 2015.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151102005571/en/
Source: Visa Inc.