Visa 2015 Annual Report Download - page 6
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The Global Opportunity
Visa Europe
In November, we were delighted to
announce that we signed a definitive
agreement to acquire Visa Europe. Visa
Europe is the only regional association
which didn’t merge into Visa Inc. in 2007
and remained a separate entity owned
by its members. We have been clear that
this was a transaction that we thought
made tremendous sense for our company
and also for Visa Europe and its members,
so we are thrilled with the prospect of
moving forward as one company.
Financial Terms
We will acquire Visa Europe for an up-
front consideration of 16.5 billion euros
consisting of 11.5 billion euros in cash
and convertible preferred stock valued
at 5 billion euros. In addition, Visa
Europe member-owners will potentially
receive an earn-out payment of up to
4.0 billion euros and 0.7 billion euros
in interest. This earn-out will be based
on the achievement of net revenue
targets during the 16 fiscal quarters
following the closing of the acquisition
and provides additional upside to both
parties if those agreed targets are met.
It will be payable following the fourth
anniversary of the transaction close.
We believe the transaction is financially
attractive for both parties, with a
balanced consideration of a mix of cash,
stock and an earn-out. We expect it to
be accretive to our stand-alone revenue
and EPS growth before transition costs
beginning in FY17, the first full year of
the combination.
The preferred shares offer current
Visa Europe members a continuing
ownership stake in the company
and also serve to provide liability
protection to our Visa Inc. shareholders
in conjunction with a new loss sharing
agreement with key UK banks. The earn-
out provides additional upside potential
for both parties if net revenue targets
are achieved. We feel the balanced
consideration encourages Visa Europe’s
current owners and Visa Inc. to work
together to enhance the long-term
value of the business to the benefit of all
parties.
Strategic Importance
Combining Visa Inc. and Visa Europe is
strategically important for both of us.
We believe the combination will create
significant benefits for both European
and Visa Inc. global clients. Our clients
will benefit as we work every day to
earn their business, bringing them
At the initial conversion rate, the shares of Visa Inc. preferred stock issued in the transaction will be convertible into an aggregate of 78,654,400 shares of class A common stock, valued at approximately €5.0 billion based on the average trading
price of the class A common stock of $71.68, and the average Euro/Dollar exchange rate of 1.12750, each for the 30 trading days ended October 19, 2015. The acquisition is subject to regulatory approvals.