The largest payment system in the world – Visa Inc (N: V), agreed to acquire Visa Europe Ltd. in a transaction with total value of 21.2 billion euro, according to a company press release.
The initial payment will be 16.5 billion euro. In addition, the payment "on the results" (in the case of high performance of the company) can be up to 4.7 billion euro four years after completion of the transaction.
The deal will bring together all the international operations of Visa in a single corporation and will be a record in the history of the American group, notes The Wall Street Journal.
Visa Europe manages a separate activity from 2007, when preparing for the IPO, Visa Inc. adopted a new business structure. These companies share a common brand, but are almost independent of each other: they have their own accounting systems. The American firm is listed on the New York Stock Exchange (NYSE), the European one is controlled by more than 3 thousand banks and operates as a licensee of Visa Inc. In addition, Visa Europe is a minority shareholder of Visa Inc., which in turn receives from the European payment system license fees (royalties).
Visa Europe, based in the UK, consists of more than 3.7 thousand participants (banks and payment services) from 36 countries, each of them belonging one of the company's shares. The Board of Directors is elected by the participants and consists of 22 representatives of the leading European banks. In 2014 the company received a profit of 219.8 million euro (+ 29%).
Visa Inc. is a global payment system that offers access to electronic payment for card holders, trade-service enterprises, financial institutions and governments in more than 200 countries. The market capitalization of the company amounts to approximately $ 192 billion.
Due to the acquisition of Visa Europe based in California, Visa Inc. can gain access to their long time interesting markets in Turkey and Poland, being characterized by high growth rates. Furthermore, it will improve its position compared to MasterCard rival.
According Citigroup analyst, Donald Fandetti, the deal could increase company profits by 5%. Sanford Bernstein expects that Visa Inc. profits will grow by 12% to 2018.