News: Deal is subject to EU approval.
Visa Inc has acquired Visa Europe in a move that will create a combined global company that serves more than 17,000 financial institutions and partners.
Under the terms of the deal, Visa Inc will pay an upfront consideration of €16.5 billion in cash and stock with the potential for an additional earn-out of up €4.7bn payable following the fourth anniversary of closing.
Visa expects to realise around $200m in annual pre-tax cost synergies through the deal by 2020, this would represent about 30% of Visa Europe’s operating expenses.
The deal is subject to approval from the European Commission after Visa changed the terms of the deal in order to appease anti-trust concerns. The change saw the company scrap the planned earn-out in exchange for an extra €1.75bn in cash.
The Visa board has appointed Gary Hoffman, CEO of Hastings Group and chairman of Visa Europe as a board member of the merged business.
Charlie Scharf, CEO of Visa Inc, said: "Gary’s broad knowledge of the European payments and banking industries brings an important perspective to the Visa Inc. Board and will be invaluable as we build our business in Europe."
Combined, the two companies will be serving more than 40 million merchant outlets, and three billion card accounts worldwide. Visa branded cards and payment products are behind approximately $6.8 trillion in global payments volume annually.
Gary Hoffman said, "It is exciting to be part of the next chapter in the Visa story. Visa Europe has performed strongly as a business and combining with Visa Inc. will provide European clients with greater access to the global scale, additional innovation resources and range of capabilities necessary to continue to offer the best payment services to their customers."