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02 November 2015

Financial Times: Visa to buy back former European arm for up to €21bn

Visa has agreed to acquire its former European subsidiary for up to €21.2bn in a deal that will generate large windfalls for some of the continent’s biggest banks.

The US group, which is the world’s largest electronic payments company, will initially pay €11.5bn in cash and €5bn worth of its own stock to Visa Europe’s owners, who include more than 3,000 European banks and payment services providers.

Four years after the deal closes, Visa Europe members will be paid an additional €4.7bn if the European business meets undisclosed revenue targets, raising the total value of the transaction to €21.2bn.

The deal ends years of speculation about whether Visa would buy back its former unit and gives the US payments company a stronger position to compete with rival MasterCard.

“This combination strengthens our payments system in Europe, as together we have even greater financial resources to invest in technology assets,” said Charlie Scharf, chief executive of Visa. “We will continue to have a strong local management team in Europe, with London remaining as headquarters for the region.”

 “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,” said Gary Hoffman, chairman of the Visa Europe Board.

Analysts said that the acquisition would help increase Visa’s earnings but they warned that MasterCard could win back some of the business that was previously tied with Visa Europe. Citigroup said that earnings could rise 5 per cent following the takeover.

Full article (FT subscription required)

© Financial Times

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