Visa 2009 Annual Report Download - page 79

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2009
(in millions, except as noted)
Note 2—The Reorganization
Description of the Reorganization and Purchase Consideration
In a series of transactions from October 1 to October 3, 2007, Visa undertook a reorganization in which Visa U.S.A., Visa International, Visa Canada
and Inovant became direct or indirect subsidiaries of Visa Inc. and the Retrospective Responsibility Plan was established. See Note 4—Retrospective
Responsibility Plan. For accounting purposes, the Company reflected the reorganization as a single transaction occurring on October 1 (the "reorganization
date"), using the purchase method of accounting with Visa U.S.A. as the accounting acquirer. The net assets underlying the acquired interests in Visa
International, Visa Canada, and Inovant (the "acquired interests") were recorded at fair value at the reorganization date with the excess purchase price over
this value attributed to goodwill. Visa Europe did not become a subsidiary of Visa Inc., but rather remained owned and governed by its European member
financial institutions and entered into a set of contractual arrangements with the Company in connection with the reorganization.
The Company issued different classes and series of common stock in the reorganization reflecting the different rights and obligations of the Visa
financial institution members and Visa Europe. The allocation of the Company's common stock to each of Visa AP, Visa LAC, Visa CEMEA, Visa Canada
(collectively the "acquired regions") and Visa U.S.A. (collectively "the participating regions") was based on each entity's expected relative contribution to the
Company's projected fiscal 2008 net income, after giving effect to negotiated adjustments. This allocation was adjusted shortly prior to the IPO (the "true-up")
to reflect actual performance in the four quarters ended December 31, 2007. The allocation of the Company's common stock and other consideration conveyed
to Visa Europe in exchange for its ownership interest in Visa International and Inovant was determined based on the fair value of each element exchanged in
the reorganization as discussed below and in Note 3—Visa Europe. Total shares authorized and issued to the financial institution member groups of the
participating regions and to Visa Europe in the reorganization totaled 775,080,512 shares of class B and class C common stock.
Total purchase consideration, inclusive of the true-up, of approximately $18.4 billion comprised of the following:
in millions
Visa Inc. common stock $ 17,935
Visa Europe put option 346
Liability under Framework Agreement 132
Total purchase consideration $ 18,413
Visa Inc. Common Stock Issued in Exchange for the Acquired Interests
The value of the purchase consideration conveyed to each of the member groups of the acquired regions was determined by valuing the underlying
businesses contributed by each, after giving effect to negotiated adjustments. The fair value of the purchase consideration, consisting of 258,022,779 shares of
class C (series I) common stock, was approximately $12.6 billion, measured at June 15, 2007, or the date on which all parties entered into the global
restructuring agreement. Additional purchase consideration of $1.2 billion, consisting of 26,138,056 incremental shares of class C common stock valued at
$44 per share were issued to the acquired regions shortly before the IPO in connection with the true-up. The fair value of these shares was determined based
on the price per share in the IPO.
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