Visa Inc. is in preliminary talks to buy former subsidiary Visa Europe Ltd, in a deal that could be valued at up to $20 billion, Bloomberg reported, citing people with knowledge of the matter. The talks, which began when Visa approached Visa Europe, are at an early stage and could fall apart if the two sides cannot agree on a price, Bloomberg said.
Visa’s shares were up 4 percent at $69.29 on the New York Stock Exchange on Friday.
Source: Yahoo Finance
The range being discussed is $15 billion-$20 billion and both companies are working with advisers, Bloomberg said. Visa said last year it might have to pay more than $10 billion to buy its London-based European licensee, Visa Europe, if the owners exercised their option to sell it.
Visa and its European counterpart split in 2007 ahead of the U.S. firm’s initial public offering. Analysts have been speculating for years that they could merge. Visa Europe is owned by more than 3,700 European banks and has a put option that would force its former parent to buy it within about nine months if at least 80 percent of its board agrees, according to company filings.
Visa has said there is a 40 percent chance that Visa Europe would exercise the put, and estimated last month that doing so would cost the Foster City, California-based company more than $10 billion. The final price depends on a complicated formula with a range of variables.
A spokeswoman for Visa declined to comment. Visa Europe was not immediately available for comment.
Persistent Question
Visa Europe’s owners explored exercising the put option and setting up their own payments business in early 2013, the Wall Street Journal reported at the time.
“It’s a consistent question,” Visa Chief Executive Officer Charlie Scharf said last month in an earnings call. “Until they get 80 percent, then it’s not going to happen. So I really don’t know.”
Visa would like to fold Visa Europe into the larger company at the earliest possible time, Scharf said in March 2014 at an investor conference.
“Over the long term, we absolutely would love Visa Europe to be part of the company,” Scharf said. “It just to us makes extraordinary amount of sense. Sooner is better.”
At an investor conference two months later, Scharf said Visa may consider issuing debt to help pay for a Visa Europe purchase.
“We think the company should have debt,” Scharf said. “The question is, at what time, for what reason. And, when you got someone with a put the size of Visa Europe, we need to be conscious of factoring that financing into our thinking.”
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
