Visa inc buys Visa Europe in 21.2 bln euro deal
Bloomberg, citing a person familiar with the matter, reported that the deal to unify the brand is valued at over $20 billion while the Wall Street Journal reported last week that the deal may be valued at almost $22 billion. And cross-border volume, again on a constant dollar basis, rose 5%.
For the full year, Visa earned $6.33 billion compared with $5.44 billion in the same period a year earlier on $13.88 billion in operating revenue. After the session commenced at $78.03, the stock reached the higher end at $78.18 while it hit a low of $77.055. In addition, Visa will pay up to 4.7 billion euros four years after the deal closes, with the exact amount based on revenue targets.
The A1 rating also reflects Moody’s expectation of a permanent debt structure now that 2 of the major uncertainties facing Visa are largely resolved – specifically, the settlement of the US merchant litigation and the exercise of the Visa Europe put option. The acquisition, which is subject to regulatory approval, is scheduled to be completed in the fiscal third quarter that ends June 30. Mr. Scharf declined to comment on the specifics of the company’s plan to raise prices. Sources have previously told Reuters that Barclays is the biggest bank active in the Visa Europe network. Visa Inc. went public on New York Stock Exchange (NYSE) since, and its European counterpart moved its headquarters to London as Visa Europe Ltd. Visa’s other operations around the world united under the name Visa Inc., but the European entity remained separate. Visa Europe is responsible for more than €1.5 trillion in payments volumes, processes over 18 billion transactions annually, and partners with approximately 3,000 financial institutions in 38 countries. For Visa’s current fiscal year, Visa Europe added almost 71 billion transactions, which the former processed.
The deal could boost earnings by as much as 5%, according to estimates from Donald Fandetti, a Citigroup analyst. As far as the bottomline is concerned, Visa projects that the deal would result in EPS accretion in the low single digit percentage point in that year.
The Bank of England, according to Sky News, has requested that Visa Europe continues its presence in the United Kingdom after the deal.
Visa also announced a $5 billion share buyback program Monday and a fourth-quarter profit of $1.51 billion.
A number of brokerages have recently commented on V. BMO Capital Markets started coverage on shares of Visa in a research report on Monday.
The deal, which will be partly funded by the issue of senior unsecured debt of up to $16 billion, is expected to be dilutive to full-year adjusted earnings in fiscal 2016, but accretive to revenue and earnings growth in 2017.