US credit card issuer Visa Inc said it will buy back its former subsidiary Visa Europe in a 21.2 billion euros (NZ$35.42 billion) deal that will give the world’s largest payments network a chance to cut costs over the long term and raise fees in the second-biggest card market.
The price for the long-anticipated deal is higher than many expected, but ends a period of strategic uncertainty that has dogged Visa in recent months.
Visa and Visa Europe, a cooperative of European banks with more than 500 million cards, were part of a global bank-owned network until 2007.
Most of the units merged to form Visa , which went public in 2008, leaving Visa Europe as a separate entity.
The deal brings all of Visa’s networks under one roof again, cementing its lead over its nearest rival, MasterCard Inc.
By value of payments, Visa Europe had a 52.2 per cent share of the European card market in 2013.
Visa says it will pay 16.5 billion euros up front in cash and convertible preferred stock, with potential for an additional payment of up to 4.7 billion euros based on revenue targets four years after the deal closes.
Barclays, the most active bank in the Visa Europe network, is likely to be the biggest winner, Bernstein analyst, Chirantan Barua, wrote in a note.