Visa 2015 Annual Report Download - page 96

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2015
any outstanding borrowings on the line-of-credit arrangement. The Company will adopt the standards
effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated
financial statements.
In April 2015, the FASB issued ASU No. 2015-05, which provides guidance about a customer’s
accounting for fees paid in a cloud computing arrangement. The amendment will help entities evaluate
whether such an arrangement includes a software license, which should be accounted for consistent
with the acquisition of other software licenses; otherwise, it should be accounted for as a service
contract. The Company will adopt the standard effective October 1, 2016. The adoption is not expected
to have a material impact on the consolidated financial statements.
In September 2015, the FASB issued ASU No. 2015-16, which simplifies the accounting for post-
acquisition adjustments by eliminating the requirement to retrospectively account for the adjustments
made to provisional amounts recognized in a business combination. The Company plans to early adopt
this guidance on a prospective basis in the first quarter of fiscal 2016. The adoption is not expected to
have a material impact on the consolidated financial statements.
Note 2—Visa Europe
Acquisition of Visa Europe
On November 2, 2015, the Company and Visa Europe entered into a transaction agreement,
pursuant to which the Company and Visa Europe agreed on the terms and conditions of the
Company’s acquisition of 100% of the share capital of Visa Europe for a total purchase price of up to
€21.2 billion. The purchase price consists of: (a) at the closing of the transaction, up-front cash
consideration of €11.5 billion and preferred stock of the Company convertible upon certain conditions
into class A common stock or class A equivalent preferred stock of the Company, as described below,
valued at approximately €5.0 billion, and (b) following the end of sixteen fiscal quarters post-closing,
contingent cash consideration of up to €4.0 billion (plus up to an additional €0.7 billion in interest),
determined based on the achievement of specified net revenue levels during such post-closing period.
The board of directors of the Company and Visa Europe have each unanimously supported the
transaction agreement and the matters contemplated thereby. Closing is subject to regulatory
approvals and other customary conditions, and is currently expected to occur in the fiscal third quarter
of 2016.
Transaction agreement and option amendment. The transaction agreement provides for the
acquisition to be effected pursuant to the exercise of the amended Visa Europe put option, as
described further below. In connection with the execution of the transaction agreement, the Company
and Visa Europe have amended the Visa Europe put option to align the terms on which Visa Europe
may exercise its rights under the put option agreement with the terms of the transaction agreement,
including the economic terms and timing. The transaction agreement prohibits Visa Europe from
exercising the put option prior to closing of the transaction and, if the transaction agreement is
terminated without completion of the acquisition, the Visa Europe put option will revert to its original,
unamended form. The transaction agreement may be terminated by the Company or Visa Europe,
subject to specified exceptions, if the transaction is not consummated by August 2, 2016, or if legal
restraints that prohibit the closing have become final and non-appealable.
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