Visa Inc. announced that the company is in discussions to purchase Visa Europe from its consortium of banks and other stake holders. The intention would be to fold Visa Europe into the overall corporate umbrella of Visa, to consolidate certain functions and to more aggressively expand the Visa footprint throughout Europe.
Visa Europe generated 2014 revenues of roughly $1.456 billion US (Euro to US dollar – 1.122) and reported adjusted EBITDA of $521 million. The EBITDA return of less than 36% is far lower than was reported by Visa Inc.
The potential purchase price is rumored to be in the $15-$20 billion US range. Visa will likely require debt financing of up to $17 billion to consolidate the entire division. At the upper proposed end of the estimated range, the purchase may prove mildly dilutive to earnings in the first year, but would be accretive to earnings thereafter. At the lower end of the estimated price range, the acquisition would be accretive.