Visa Inc amends Visa Europe deal to appease EC

Visa Inc amends Visa Europe deal to appease EC

Following feedback from the European Commission, Visa Inc has tweaked the terms of its acquisition of Visa Europe, scrapping a planned earn-out in exchange for an extra EUR1.75 billion in cash.

Under a deal struck in November, Visa Inc was set to pay an upfront consideration of EUR16.5 billion in cash and stock with the potential for an additional earn-out of up to EUR4.7 billion payable following the fourth anniversary of closing.

However, in an effort to keep the EC on-side, the US card giant says that it has reached preliminary agreement with bank-owned Visa Europe to change the transaction details.

Says a statement: "Instead of an earn-out, the cash consideration payable in the transaction will be increased by EUR1.75 billion: EUR750 million payable upon closing, and EUR1.0 billion, plus 4% compound annual interest, payable on the third anniversary of closing."

The deal is still subject to negotiation and may not now be closed by the end of the third quarter, as initially planned.

Meanwhile, Visa Inc has also posted its second quarter results, revealing adjusted net income of $1.6 billion, up five per cent on the prior year, on revenues of $3.6 billion.

Calling the results "solid", CEO Charlie Scharf warns: "The US consumer remains strong, but we see weakness in China, Brazil, and oil based economies. Since we are not seeing any material improvements in economic trends, we are cautious as we head into the second half of fiscal 2016."

Comments: (1)

A Finextra member
A Finextra member 16 May, 2016, 11:33Be the first to give this comment the thumbs up 0 likes

The deal will comprise £8.2billion of cash and £3.6billion in shares paid by Visa and is due to close in the third quarter of next year. Four years after the deal completes the banks could receive another payout of more than £3.3billion if sales targets are met.