Visa to Buy Former Subsidiary Visa Europe in 21.2-b Deal

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Visa said on Monday it would buy former subsidiary Visa Europe in a dealvalued at up to 21.2 billion ($23.34 billion), putting the company in astronger position to compete with MasterCard.Visa, the world's largest creditand debit card company, said it would pay 16.5 billion s up front, withpotential for an additional payment of up to 4.7 billion based on revenuetargets four years after the close of the deal.The upfront payment comprises 11.5 billion in cash and preferred stockconvertible into Visa class A common stock valued at 5 billion. Visa will issuesenior unsecured debt worth $15 billion$16 billion to fund the cash portionof the deal and increase a buyback program for Class A common stock in2016 and 2017 to offset the effects of issuing the preferred stock.The company, whose shares were down 1.3% at $76.54 in premarket trading,said it would buy back an additional $5 billion of shares in addition to apreviously announced 17% increase in its quarterly dividend.

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Visa and Visa Europe, a cooperative of European banks with over 500 millioncards, were part of a global bank-owned network until 2007. Most of theunits merged to form Visa, which went public in 2008, leaving Visa Europe asa separate entity.Barclays is the most active bank in the Visa Europe network and stands tomake the most among the banks that will share the proceeds of thebuyout.More than 3,000 companies are expected to profit from the deal.Barclays could receive up to 1.2 billion in total, including upfront cash,deferred cash and payments in stock, depending on how the business andVisa shares perform, a person familiar with the matter said. Barclays said in astate ment that it expected to make a post-tax profit of about £400 million($618.6 million) next year when the takeover closes, but that only reflectsthe upfront cash element of the deal.

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Nationwide Building Society said it expected its initial share to be about1% of the total proceeds, while Worldpay Group said it would get up toabout 1.25 billion from the deal, including 592 million in cash up front.Visa also reported on Monday that its net income jumped to $1.51billion, or 62 cents per diluted class A share, in the fourth quarterended September 30, from $1.07 billion, or 43 cents per share, a yearearlier.

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