Visa (V) May Have Visa Europe 'Put' Back to Them
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Visa (NYSE: V) is active Tuesday on reports the group of European banks that own Visa Europe may sell the company to Visa and set up a rival system. This could force Visa to raise money to cover the cost.
A Visa Europe board meeting is schedule for April and there the directors will discuss whether to exercise its option to sell to Visa, according to reports from the Wall Street Journal.
In its 2007 reorganization before its 2008 IPO, Visa Europe was the only one of five geographically separate corporate entities that didn't became a subsidiary of Visa. Instead, the two set of contractual arrangements.
Visa has a call option to buy the European company, while Visa Europe has a put option to sell it to Visa. On the put option, Visa has warned investors in filings that if Visa Europe makes the company acquire all of its outstanding stock, they will incur substantial costs and may suffer a material and adverse effect on operations and net income. "We will incur a financial obligation of several billion dollars or more if Visa Europe exercises this option," they disclose. "Visa Europe may do so at any time." If this were to occur, Visa said they may need to obtain third-party financing in order to meet our obligation, by either borrowing funds or selling stock. An equity offering, or the payment of part of the exercise price in stock, would dilute the ownership interests of stockholders, they said.
Visa Europe could be worth $3 billion in a sale, according to a Journal source.
A Visa Europe board meeting is schedule for April and there the directors will discuss whether to exercise its option to sell to Visa, according to reports from the Wall Street Journal.
In its 2007 reorganization before its 2008 IPO, Visa Europe was the only one of five geographically separate corporate entities that didn't became a subsidiary of Visa. Instead, the two set of contractual arrangements.
Visa has a call option to buy the European company, while Visa Europe has a put option to sell it to Visa. On the put option, Visa has warned investors in filings that if Visa Europe makes the company acquire all of its outstanding stock, they will incur substantial costs and may suffer a material and adverse effect on operations and net income. "We will incur a financial obligation of several billion dollars or more if Visa Europe exercises this option," they disclose. "Visa Europe may do so at any time." If this were to occur, Visa said they may need to obtain third-party financing in order to meet our obligation, by either borrowing funds or selling stock. An equity offering, or the payment of part of the exercise price in stock, would dilute the ownership interests of stockholders, they said.
Visa Europe could be worth $3 billion in a sale, according to a Journal source.
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