Visa announced Monday that it intends to purchase its sister company, Visa Europe, in a deal valued as much as $23.4 billion that will reunite the two companies eight years after they parted ways.
The transaction includes $12 billion in cash upfront, and an additional $5.2 billion after the four-year anniversary of the deal's completion if certain revenue targets are met, reported the Associated Press. The purchase ends years of analyst speculation about whether the companies would ever reunite following the 2007 split.
Visa plans to pay for the transaction through the issuance of $15 billion to $16 billion in senior unsecured debt.
"We are very excited about unifying Visa into a single global company with unmatched scale, technology and services," Visa CEO Charles Scharf said in a prepared statement.
Visa and Visa Europe operated under a single banner until 2007, when Visa started its conversion from being cooperative owned by the banks into a publicly traded company, which went into full effect in 2008, reported USA Today. Visa Europe was independent since 2004, but Visa had a continued influence on its sister company's fate through an option to purchase it under certain conditions.
The deal will give Visa important exposure to Europe, whose lack of meaningful contributions from overseas have long been seen as a weakness for Visa, and an advantage for its rival MasterCard, which owns its European operations. The combined company, however, will likely face increased regulatory scrutiny as the payment process industry becomes further consolidated under Visa, MasterCard and American Express.
Visa's shares dropped 3.5 percent to $74.83 in early market trading, according to Bloomberg.
The deal is expected to be completed by the third quarter of 2016, as long as regulators approve.
