Visa credit card company announces plans to restructure
By Jeremy M. Simon | Published: October 17, 2006
See more recent story: "Visa provides IPO details."
Visa announced plans on Oct. 11, 2006, to restructure its nonEuropean operations into a global corporation and offer a majority of its stock to the public. The credit card giant is currently a private membership association jointly owned by more than 20,000 financial institutions across the globe.
The decision by Visa comes on the heels of a move by MasterCard to go public last May. Since MasterCard's initial public offering, the company's stock price has surged 84 percent in four and a half months.
The head of Visa's restructuring committee informed reporters in a conference call that a stock offering could come in 12 to 18 months. The first phase of Visa's restructuring will involve a series of mergers involving Visa USA, Visa Canada, and Visa International, resulting in a corporation owned by the members, while Visa Europe will remain a membership association owned and governed by its European member banks and become a licensee of Visa Inc.
The next step would involve a majority of the shares being sold to the public. Visa plans to list its shares "on a major stock exchange," but didn't specify which one.
Visa explained that one of the primary reasons for the IPO process is to deal with legal claims that have targeted the group. Visa and MasterCard have come under legal fire in the U.S. from merchants who allege the card networks, and the huge banks that own the networks, are colluding to establish artificially high "interchange" fees that get assessed on every card transaction. Additionally, the card networks have encountered U.S. government antitrust scrutiny. Visa is hoping that by becoming a public company that is not owned by the world's largest banks, some of that pressure would be averted.
Visa's new board will be made up of a majority of independent directors, with a search for independent directors and a CEO for Visa Inc. currently under way.
National BankAmericard Inc., incorporated in Delaware in 1970, later changed its name to Visa in 1976. Visa has 3,564 workers in the U.S., and links over 13,000 financial institutions, 6.3 million merchant acceptance locations and 500 million cards.
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