Could it be that the much anticipated deal between Visa and Visa Europe may not be in the cards?
If Friday’s stock market action was any tell, Wall Street may think there’s a chance a significant deal between the two, telegraphed to happen this fall, may not go down smoothly.
The stock market, which sent Visa shares down 1.5 percent intraday before a rebound, took its cue from what Seeking Alpha said was chatter that one sell-side firm, Evercore ISI, had posited that the acquisition of Visa Europe by its former parent (Visa) may not take place — or if a deal does take place, it will be smaller than rumors from earlier in 2015.
As has been widely reported, Visa has been in talks to buy the firm, which has been separate for eight years. Back in May, various financial media wrote that Visa approached Visa Europe with an initial deal value pegged at between $15 billion and $20 billion. The companies do have ties, as they maintain a licensing agreement. Visa Europe manages more than 500 million accounts and processed more than $16 billion in transactions in 2014. Under the Visa Europe ownership structure, comprised of more than 3,000 banks, there needs to be a thumbs up on the deal from at least 80 percent of that consortium, which effectively acts as a “put” that would drive Visa Europe into Visa’s arms.
Visa, for its part, has said through CEO Charlie Scharf that the company would indeed like to take ownership of Visa Europe, and it has been estimated that any merger would take several months to complete (if Visa Europe exercises its put, the timeframe has been pegged at nine months).
In deal chatter that came over the summer, reports said that Visa had “proposed the outline” of a takeover worth $21 billion.