Visa Inc said on Monday it would buy former subsidiary Visa Europe Ltd in a deal valued at up to 21.2 billion euros ($23.34 billion), putting the company in a stronger position to compete with MasterCard Inc.
Visa, the world's largest credit and debit card company, said it would pay 16.5 billion euros up front, with potential for an additional payment of up to 4.7 billion euros based on revenue targets four years after the close of the deal.
The upfront payment comprises 11.5 billion euros in cash and preferred stock convertible into Visa Inc class A common stock valued at 5 billion euros.
Visa Inc will issue senior unsecured debt worth $15 billion-$16 billion to fund the cash portion of the deal and increase a buyback program for Class A common stock in 2016 and 2017 to offset the effects of issuing the preferred stock.
The company, whose shares were down 1.3 percent at $76.54 in premarket trading, said it would buy back an additional $5 billion of shares in addition to a previously announced 17 percent increase in its quarterly dividend.
Visa Inc and Visa Europe, a cooperative of European banks with over 500 million cards, were part of a global bank-owned network until 2007.
Most of the units merged to form Visa Inc, which went public in 2008, leaving Visa Europe as a separate entity.
Barclays Plc is the most active bank in the Visa Europe network and stands to make the most among the banks that will share the proceeds of the buyout. More than 3,000 companies are expected to profit from the deal.
Barclays could receive up to 1.2 billion euros in total, including upfront cash, deferred cash and payments in stock, depending on how the business and Visa Inc shares perform, a person familiar with the matter said.
Barclays said in a statement that it expected to make a post-tax profit of about 400 million pounds ($618.6 million) next year when the takeover closes, but that only reflects the upfront cash element of the deal.
Nationwide Building Society said it expected its initial share to be about 1 percent of the total proceeds, while Worldpay Group Plc said it would get up to about 1.25 billion euros from the deal, including 592 million euros in cash up front.
Visa also reported on Monday that its net income jumped to $1.51 billion, or 62 cents per diluted class A share, in the four quarter ended Sept. 30, from $1.07 billion, or 43 cents per share, a year earlier.