Deutsche Bank on Payment Networks: Settlement Terms a Big Win for V/MA
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Rating Summary:
35 Buy, 11 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 11 | New: 13
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Deutsche Bank on Payment Networks: Settlement Terms a Big Win for V/MA
Analyst, Bryan Keane, said, "On Friday, Visa (NYSE: V) / MasterCard (NYSE: MA) announced an MOU to settle the 7-year merchant interchange litigation involving a cash sum of $6.05bn ($4.033bn from V, $790m from MA) and temporary interchange cuts (10 bps for 8 months beginning mid-2013; $1.2bn total value) resolving all claims brought against the networks by individual retailers in a series of lawsuits filed in 2005 and any future claims. Most importantly, after reading the MOU and speaking with our industry contacts, the agreement does nothing to increase competition (e.g., freedom of routing) or damage the networks’ dominant positions. We expect the agreement to be submitted for preliminary approval by the judge over the next 90-120 days and changes to take place in 2013. As a result of no harmful business practice changes, V/MA reiterated future guidance, and we recommend investors aggressively buy on this deal with a big risk removed."
Analyst, Bryan Keane, said, "On Friday, Visa (NYSE: V) / MasterCard (NYSE: MA) announced an MOU to settle the 7-year merchant interchange litigation involving a cash sum of $6.05bn ($4.033bn from V, $790m from MA) and temporary interchange cuts (10 bps for 8 months beginning mid-2013; $1.2bn total value) resolving all claims brought against the networks by individual retailers in a series of lawsuits filed in 2005 and any future claims. Most importantly, after reading the MOU and speaking with our industry contacts, the agreement does nothing to increase competition (e.g., freedom of routing) or damage the networks’ dominant positions. We expect the agreement to be submitted for preliminary approval by the judge over the next 90-120 days and changes to take place in 2013. As a result of no harmful business practice changes, V/MA reiterated future guidance, and we recommend investors aggressively buy on this deal with a big risk removed."
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