In the latest twist in the ongoing saga between Visa and its European counterpart, Sky News reported Thursday (Aug. 20) that the payments giant has “proposed the outline” of a takeover, which has as a hallmark a large upfront payment in a deal that could be worth $21 billion.
Of the $21 billion price tag, there would be a “substantial” deferred element in place, according to Sky, citing unnamed sources, with payouts tied to performance milestones.
The rumors of an impending deal are not necessarily surprising as Visa said during its conference call last month discussing the latest quarterly earnings that the company and Visa Europe were in discussions about a tie-up, with an intention to finalize a deal by October of this year. And deal rumors surfaced back in May, too.
And as talks between the companies continue, Sky reported that the deal is swaying many of Visa Europe’s shareholders. The financial press has widely reported that Visa Europe has a put option, which would mean that Visa would buy its sister company at a predetermined price. Sky said the $21 billion price tag would exceed Wall Street expectations of just how much Visa Europe could fetch in a deal.
There could still be some stumbling blocks in the path toward a consummation, Sky reported, as French bank members of the Visa Europe consortium have opposed a deal with Visa. And there may be an added wrinkle in which European banks and other members would have to negotiate new fee arrangements with Visa (the combined entity) in the wake of a deal.
Sky noted that there is a strategic element goading Visa toward a linkup with Visa Europe, as the latter company processed 16 billion transactions last year, adding scale and international reach to the Visa operations that are already in place.