A Schism Ahead For Visa, Visa Europe?

The idea that Visa and Visa Europe were set to get together wasn’t really outlandish, and reports suggested that the two might have been looking for a deal between them.

However, recent moves in the market suggested that a potential deal may not come into being at all, and this was backed up by some additional reports.

The recent word suggested that much of Wall Street doesn’t believe Visa and Visa Europe will get together after all, as firms like Evercore ISI suggested that Visa’s acquisition of Visa Europe wouldn’t go off. Evercore even reportedly suggested that, if the deal actually does go through, it may be a smaller deal than expected, based on word from earlier this year.

Visa and Visa Europe have been separate companies for the last eight years—the two do have a licensing agreement together—but reports suggest that the two might be looking to reconcile. Reports suggested that, in May, Visa brought a potential deal to Visa Europe running somewhere between $15 billion and $20 billion.

But there were some impediments right from go; the Visa Europe ownership structure is comprised of over 3,000 banks by some reports, and to approve any deal, at least 80 percent—over 2,400 banks—need to approve the deal. Given that Visa Europe processed over $16 billion in transactions in 2014 alone, the company may not be interested in a $15 - $20 billion deal.

Subsequent reports may have accommodated this development, with the “outline” of a takeover talking about $21 billion.

It’s still early, of course, and rallying together the support of a couple thousand banks cannot be an easy or simple process. However, with the stock moves seen recently, it would be easy to doubt if such a move can hold together.

It would have been interesting if the two had gotten together; a more powerful Visa would have been in a better position to take on not only MasterCard, but also the growing array of options in the mobile payments space.

Not that Visa’s having a tough time, but there’s really only more competition showing up. The more competitors on hand, the tougher go of it Visa will have, and it can use any advantage it can get. So while the Visa and Visa Europe deal may not come off, it may yet go through, and it’ll bear watching up until the last second.