Visa Warns of Cost over Acquisition of Visa Europe

by Tristan Hugo-Webb 0

Visa Inc. has said in one of its latest SEC filings thatshould European banks exercise their option to sell Visa Europe to Visa Inc.the company would need to find approximately $10 billion to fund the acquisitionand would need to access third-party financing to meet its obligations underthe 285-notice period specified in the contracts.

The acquisition of Visa Europe has long been rumored withinthe industry and with a price tag of $10 billion; European banks may beinclined to push the acquisition sooner than later, especially when the figureof $10 billion is being circulated.

In the SEC filing, Visa Inc. wrote, “If we cannot do soquickly and cost-effectively, the integration could divert the time andresources of senior management and other key resources, disrupt our currentoperations and adversely affect our results of operations,” states thecompany. “In addition, we would become subject to any ongoing or futureregulatory disputes as a result of EU regulations that govern the operations ofVisa Europe. We may also be required to assume any ongoing or future litigationinvolving Visa Europe.”

While the acquisition of Visa Europe has clear benefits toboth Visa Inc. and the European banks that would receive a $10 billionwindfall, it also has its challenges, however the acquisition of Visa Europe byVisa Inc. is more a question of when rather than how or for how much.

Overview by Tristan Hugo-Webb, Associate Director of the International Advisory Service for Mercator Advisory Group

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