Visa will acquire its former European subsidiary Visa Europe for 21,2 billion euros. The US credit card giant made it known today, specifying that the operation, approved by the boards of directors of both companies, will take place in two phases.
The first provides for an initial payment of 16,5 billion in cash and shares, the second for an additional payment of up to 4,7 billion euros after the fourth anniversary of the closing of the transaction. Visa expects the transaction to be completed in the third quarter of fiscal 2015-16. The deal was long overdue and will bring the two credit card groups back together after eight years.
The deal announced today is the largest ever for Visa. For years, Visa and Visa Europe were under the umbrella of the Visa International Service Association, but that changed in 2007 when the US operations became a publicly traded company, the international operations merged into Visa Inc, and the European operations remained separate .
At the end of September, around 500 million Visa cards were issued in Europe. Visa Europe generates payment volumes of approximately 1.500 trillion euros, processes approximately 18 billion transactions per year, which will add to the approximately 71 billion transactions processed by Visa.
“Integrating the businesses will ensure the financial strength and economies of scale needed to accelerate the new generation of payments in Europe,” said Nicolas Huss, chief executive officer of Visa Europe.
Visa also released its fiscal 2015 fourth quarter results. In the three months to September, the company reported profits of $1,51 billion, 62 cents a share, up from 1,07 billion, 43 cents a share. Turnover rose 11% to 3,571 billion.
Analysts were expecting a profit of 63 cents per share, on a turnover of 3,567 billion. Despite what Chief Executive Officer Charlie Scharf called "a challenging global economic environment," credit card payment volumes soared 12% to $1.300 trillion. The company also announced a new $5 billion buyback program.
