The owners of
) European licensee - Visa Europe - might sell the company to
Visa Inc., according to media reports. Visa Europe is considering
the sale and will hold a board meeting to consider the same next
The media reports also revealed that Visa Europe would be
valued at $3 billion in case the sale takes place. However, Visa
Inc. might have to pay a premium for the deal.
Visa Inc. holds call options to buy the shares of the European
company. Meanwhile, Visa Europe's shareholders have put options
to sell their shares to Visa Inc., which means that Visa Inc. has
no option other than buying the shares in case the owners of Visa
Europe decide to sell them.
Over 3,700 European banks own and operate Visa Europe. These
banks are considering starting a rival payment network in Europe
after the sale.
However, neither company confirmed the transaction.
Although Visa Inc. will have to spend a huge amount in case
the sale is finalized, the company will gain enormously in terms
of international market share as Visa Europe is the largest card
network in the European Union at present. Moreover, the purchase
will expand the company's presence in rapidly growing markets in
European countries like Poland and Turkey.
The purchase will also enhance the competitive strength of
Visa Inc. as rival
) already has a presence in Europe. On the other hand, the
company will face higher regulations as it will have to abide by
the regulations of the European Union following the purchase.
Visa Inc. currently carries a Zacks Rank #2 (Buy). Other
companies offering financial services such as
Total System Services, Inc.
Alliance Data Systems Corporation
) also carry a Zacks Rank #2 and are worth considering.
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VISA INC-A (V): Free Stock Analysis Report
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