Is Visa Europe for Sale? WSJ Thinks So. (March 28, 2013)
Reports have swirled for the past week or more that the European banks that own Visa Europe might soon exercise an option to sell the organization to U.S.-based Visa Inc. and set up a new network of their own. Although Visa Europe members may be driving the sale, taking control of the European network could be a boon for Visa Inc., according to at least one observer.
According to a March 19 Wall Street Journal report citing sources close to the matter, Visa Europe members met in London earlier this month to consider selling their shares to Visa Inc. under a put option held by the European network. Visa Europe, a consortium of more than 3,700 European banks, was formed in 2007, ahead of Visa Inc.’s 2008 initial public offering. Visa Europe’s board is scheduled to meet in April to discuss the plan, the WSJ report said, though it’s possible no decision will be made at that time.
If Visa Inc. buys the shares of Visa Europe, it might have to pay up to $3 billion, according to a source cited by the WSJ. While that significant cash outlay might cut into short-term profits, Visa Inc. would have plenty to gain from the purchase, says Tony Craddock, CEO of London-based Gx, a global exchange for emerging payments and prepaid. “There’s some real value in Visa Europe, derived from several years of operating a highly customer-centric membership model and creating dominance in areas such as Visa Debit,” Craddock tells Paybefore.
The sale could put some short- and medium-term pressure on Visa Inc., as it integrates the unit into its existing operations and ensures compliance with European Union financial regulations. “M&As force companies to focus internally for a while,” notes Craddock. “In the long term, the customers and merchants will definitely win [if the sale happens], because competition will drive down prices and stimulate innovation.”
