Visa Mulls $20 Billion Buy Of Visa Europe

Visa Inc. may buy its former unit Visa Europe Ltd. for as much as $20 billion, according to unnamed sources close to the deal, Bloomberg reported Friday (May 8).

Visa, the world’s largest payments network, approached its European counterpart, the report indicated, which noted that the deal is in its early stages. The possible value range lies between $15-$20 billion, sources told Bloomberg.

Visa Europe, which has a licensing agreement with Visa, managed more than 500 million accounts and processed more than 16 billion transactions last year, according to its annual report. It earned 219.8 million euros ($246 million) in 2014, which was up 29 percent from 2013.

Visa and Visa Europe split in 2007 ahead of the U.S. company’s initial public offering the next year. Visa Europe’s ownership base is comprised of more than 3,000 European banks. The banks in turn have a put option that – if 80 percent of the board agrees – would force Visa Inc. to buy the European company within about nine months, regulatory filings show.

Visa management has said there is a 40 percent chance that Visa Europe would exercise the put option; the company estimated that doing so would cost the company more than $10 billion, Bloomberg noted.

Visa CEO Charlie Scharf touched on the possible tie-up and put option last month in an earnings call, and in March Scharf said that Visa would like to fold Visa Europe into the larger company at the earliest possible time.

“Over the long term, we absolutely would love Visa Europe to be part of the company. …It just to us makes extraordinary amount of sense. Sooner is better,” Scharf said in March.

And two months later Scharf said Visa would consider debt as a vehicle to finance the deal.

“We think the company should have debt,” Bloomberg quoted Scharf as saying at the time. “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.”