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Visa consolidates with US$23bn buy of European arm

“We are very excited about unifying Visa into a single global company," said Visa CEO Charles Scharf.
Visa consolidates with US$23bn buy of European arm
Some 3,000 financial institutions in 38 countries use Visa Europe, the American group highlighted

-- adds Lloyds detail --

Lloyds Banking (LON:LLOY) is to pick up a £300m windfall after New York listed card payments group Visa (NYSE:V) agreed to buy Visa Europe through a US$23.4bn (€21.2bn) deal.

Some €16.5bn of the consideration will be paid up-front, €11.5bn in cash, with remainder due after four years.

Lloyds’ share of the sale proceeds will comprise cash and preferred stock.

The Group expects to report a pre-tax gain for the upfront consideration of approximately £300mln, which it expects to receive in 2016.

Other UK banks are expected to get similar amounts with Barclays tipped to be the major beneficiary.

It may net £400mln, RBS £200mln and HSBC £150mln, according to analysts.

Charles Scharf,  Visa’s chief executive, said: “We are very excited about unifying Visa into a single global company with unmatched scale, technology and services.”

“This transaction is beneficial for financial institutions, acquirers, merchants, cardholders, and other partners, as well as for our employees and shareholders.”

The American business said it capitalizes on strong growth opportunities in what it describes as “a highly attractive region.

Under Visa Europe there are in excess of 500mln cards issued in the region, Visa said. It enables €1.5trn worth of payments per year, in over 18bn processed payments, it added. And, it highlighted that a total of 3,000 financial institutions in 38 countries use Visa Europe.

Visa Europe has delivered impressive results over recent years and the Board believes that it is the right time to reunite these two very healthy businesses under common management,” said Gary Hoffman, Visa Europe chairman. 

Visa also revealed this morning what it said was a ‘strong’ fourth quarter performance.

The company had quarterly net income of US$1.5bn, which takes the annual figure to US$6.3bn.

It also authorised a US$5bn share buy-back programme, and repeated that it will increase dividend payments.

Shares in Lloyds rose by 1.5% to 74.8p, Barclays (LON:BARC) by 1.3% to 235p and RBS (LON:RBS) by 1.7% to 323p.

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July 25 2015

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