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Visa to Spread Further in Europe with Visa Europe Buyout

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Visa Inc. (V - Free Report) , a global payments technology company, has completed the acquisition of Visa Europe Ltd within the scheduled time.

For Visa, reuniting with Visa Europe has been a crucial long-term growth strategy. The company stands to gain a competitive edge from Visa Europe’s strong business model. Already the leading card processor, the addition of Visa Europe will further boost Visa’s position in the industry with digital payment products, services and processing to about 17,100 financial institution clients and partners, 40 million merchant outlets, and 3.0 billion Visa cards worldwide.

Visa-branded cards and payment products account for approximately $6.8 trillion in global payments’ volume annually. The combined company will pose stiff competition to MasterCard Inc. (MA - Free Report) , American Express Co. (AXP - Free Report) and Discover Financial Services (DFS - Free Report) .

Visa will get direct access to the attractive European payments’ market, which was an early adopter of the mobile payments’ system. The region is expected to see further growth in mobile payments given the widespread availability of the Near Field Communication technology. Moreover, a number of new mobile payment partnerships, platforms and products launched by Visa in recent years should increase mobile payments in Europe.

For Visa Europe, the deal will add a new dimension to its services as a result of Visa’s vast scale and resources across the globe.

Visa expects the transaction to be dilutive to its fiscal 2016 adjusted earnings per share in the low single-digit percentage point range. This dilutive effect will be due to preference share issuance and debt issuance related to the financing of the deal. In 2017, the acquisition will accrue to adjusted earnings per share in the low single-digit percentage point range before one-time integration costs. However, upon complete integration, the transaction is expected to be accretive to adjusted earnings per share in the high single-digit percentage point range by fiscal full-year 2020.

Concurrently, Visa announced an addition to its board of directors with the appointment of Gary A. Hoffman, the current director and chairman of Visa Europe.

Currently, Visa carries a Zacks Rank #3 (Hold).

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