Visa buying sister company Visa Europe for $ 23 billion

Payment processing giant Visa announced plans Monday to buy its sister company, Visa Europe, in a deal that could be worth more than $ 23 billion US and would consolidate all of Visa’s operations worldwide.

The deal would make the world’s largest payment processing company even larger. The two companies have more than 2.9 billion cards issued on its combined network, processing roughly 88 billion individual transactions a year.

“We’re very excited about unifying Visa into a single global company with unmatched scale, technology and services,” said Charles Scharf, Visa’s chief executive officer, in a prepared statement.

Under the terms of the transaction, Visa will pay 11.5 billion euros ($ 12.66 billion US) in cash plus stock valued at about US$ 5.5 billion. Visa Europe shareholders

We’re very excited about unifying Visa into a single global company with unmatched scale, technology and services.

would also earn an additional payment valued at nearly $ 5.2 billion US if certain revenue targets are met four years after the deal is closed, which is expected in mid2016.

Visa plans to pay for the transaction through the issuance of $ 15 billion US to $ 16 billion US in new debt.

Visa and Visa Europe operated under one banner for years, but had to separate when Visa started its conversion from a co- operative owned by the banks into a publicly traded company.

Visa Europe became independent of Visa in 2007 but Visa always continued to have a hand in the fate of Visa Europe through an option to buy Visa Europe under certain conditions. Visa became a publicly traded company in 2008.

“We still see Europe as a very attractive growth market. It will be the second- largest market for Visa once the merger is completed,” Visa CFO Vasant Prabhu said.

Visa Europe is collectively owned by approximately 3,000 banks and payment companies and has no public shareholders like Visa does.

When Visa Europe is purchased, it should provide a notable financial windfall for the European banks who own it. British bank Barclays said Monday it expects to make a profit of 400 million British pounds ($ 617.98 million US) once the sale is completed.