American global credit processor and multinational financial services firm, Visa Inc., announced on Monday it will buy its European counterpart for $23.4 billion or 21.2 billion euros in cash and in stocks, reported Los Angeles Times.
The Visa firms split in 2007 before Visa planned to go public. Visa USA, Visa International and Visa Canada merged and became Visa Inc. and held headquarters in Foster City, California. Meanwhile, Visa Europe remained owned by banks and payment service providers.
Visa Europe is a former subsidiary of Visa Inc., said Reuters.
If Visa Inc. achieves revenue goals for the next four years, it would pay an additional $5.2 billion to Visa Europe shareholders.
To make the deal, Visa plans to use $15 to $16 billion in senior unsecured debt. The firm expects to spend $150 million to close the deal and another $450 to $500 million to merge with its former partner. Reports said the deal will save the combined firm about $200 million in annual costs, according to USA Today.
People in Europe use about 500 million Visa credit cards annually and make 18 billion transactions amounting to $1.7 trillion.
"We are very excited about unifying Visa into a single global company with unmatched scale, technology and services," stated Visa Inc. CEO Charles W. Scharf. "This transaction is beneficial for financial institutions, acquirers, merchants, card holders, and other partners, as well as for our employees and shareholders."
In Europe, 37 percent of personal transactions are in cash and check. Nicolas Huss, chief executive officer of Visa Europe said the merger of Visa Inc. and Visa Europe would form a "financial strength and operational scale necessary to accelerate the next generation of payments throughout Europe."
After nearly eight years the Visa companies split, they are about to have the last company left and become really one. The merger is still subject to regulatory approval and may close in the third fiscal quarter next year.
