Is Visa about to buy Visa Europe for $20bn?

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Payment juggernaut Visa is rumoured to be in negotiations with former subsidiary Visa Europe in a takeover deal that is valued at around $20bn.

Speculation began on Friday, with Bloomberg reporting that negotiations between the two payment firms are at an exceptionally early and tentative stage.

One of the potential stumbling blocks regarding the deal is the price. Advisers for both groups are visualising different estimates, with Visa rumoured to be valuing the deal at $15bn, and Visa Europe expecting a sum closer to $20bn.

Despite the potential pitfalls, the negotiations are very likely to prove successful. Bloomberg reveals that the 3000 European banks that own Visa Europe have put in an option that would force Visa into buying back the company.

This option is rumoured to expire in the next nine months. For the option to go ahead, 80 per cent of Visa Europe’s board would have to agree to the deal.

‘‘It’s a consistent question. Until they get 80 per cent, then it’s not going to happen. So I really don’t know,” said Charlie Scharf, Visa’s CEO in an earnings call.

Although both companies share the same name, they haven’t been associated together for nearly 10 years. In 2007, the two firms split when Visa launched an initial public offering (IPO).

Visa’ admiration of its former counterpart is well known. Charlie Scharf was reported stating to Bloomberg in 2014 that ‘‘Over the long term, we absolutely would love Visa Europe to be part of the company.’’

 

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