Visa Europe
This document is being provided for the exclusive use of ASHISH KOCHAR at THREADNEEDLE ASSET
MANAGEMENT LTD
May 15, 2015
Lisa D. Ellis (Senior Analyst) • lisa.ellis@bernstein.com • +1-212-756-1855
Harshita Rawat, CFA • harshita.rawat@bernstein.com • +1-212-969-6228
Zhe Shen • zhe.shen@bernstein.com • +1-212-823-3627
Visa-Visa Europe: Answers to the Top 25 FAQs, Including our
Accretion Math and Deep Dive on Yields
Ticker
MA
V
SPX
Rating
CUR
O
O
USD
USD
13 May 2015
Closing
Price
92.52
68.65
2098.48
Target
Price
TTM
Rel.
Perf.
108.00
77.00
13.1%
18.9%
EPS
P/E
2014A
2015E
2016E
2014A
2015E
2016E
Yield
3.10
2.16
116.15
3.33
2.64
117.59
4.22
3.07
132.68
29.8
31.9
18.1
27.8
26.0
17.8
21.9
22.4
15.8
0.5%
0.7%
2.0%
O – Outperform, M – Market-Perform, U – Underperform, N – Not Rated
Highlights
U.S. Computer Services & IT Consulting
Investor interest in the Visa Europe put option has, not surprisingly, dramatically intensified since
Bloomberg reported last Friday that Visa Inc. and Visa Europe are actively engaged in discussions about a possible sale.
As a follow-up to our May 8 note (see link: Visa-Visa Europe: Price Tag Could be >$20 B, Good for Visa
Regardless (It Is All About Yields), + Details of the Put Option), today we address the top 25 questions we've received from investors over the past few days, covering topics including estimated EPS accretion, why we believe Visa Inc. can raise yields, why there may be cost dis-synergies not synergies, the impact of the recent European payments regulation, and how market share dynamics in Europe might change if a deal occurred.
A few key messages before we dive into the detail:
We estimate '17 cash EPS accretion would be ~10-12% for Visa Inc. if the put option was exercised at a
$20 B price, or ~ 35 cents on our forecasted FY17 EPS of $3.55 (Exhibits 1 and 2)
We believe Visa Inc. could pay $20+ B for Visa Europe – we assume $20 B in our accretion estimates.
The major source of value for Visa Inc.
MANAGEMENT LTD
May 15, 2015
Lisa D. Ellis (Senior Analyst) • lisa.ellis@bernstein.com • +1-212-756-1855
Harshita Rawat, CFA • harshita.rawat@bernstein.com • +1-212-969-6228
Zhe Shen • zhe.shen@bernstein.com • +1-212-823-3627
Visa-Visa Europe: Answers to the Top 25 FAQs, Including our
Accretion Math and Deep Dive on Yields
Ticker
MA
V
SPX
Rating
CUR
O
O
USD
USD
13 May 2015
Closing
Price
92.52
68.65
2098.48
Target
Price
TTM
Rel.
Perf.
108.00
77.00
13.1%
18.9%
EPS
P/E
2014A
2015E
2016E
2014A
2015E
2016E
Yield
3.10
2.16
116.15
3.33
2.64
117.59
4.22
3.07
132.68
29.8
31.9
18.1
27.8
26.0
17.8
21.9
22.4
15.8
0.5%
0.7%
2.0%
O – Outperform, M – Market-Perform, U – Underperform, N – Not Rated
Highlights
U.S. Computer Services & IT Consulting
Investor interest in the Visa Europe put option has, not surprisingly, dramatically intensified since
Bloomberg reported last Friday that Visa Inc. and Visa Europe are actively engaged in discussions about a possible sale.
As a follow-up to our May 8 note (see link: Visa-Visa Europe: Price Tag Could be >$20 B, Good for Visa
Regardless (It Is All About Yields), + Details of the Put Option), today we address the top 25 questions we've received from investors over the past few days, covering topics including estimated EPS accretion, why we believe Visa Inc. can raise yields, why there may be cost dis-synergies not synergies, the impact of the recent European payments regulation, and how market share dynamics in Europe might change if a deal occurred.
A few key messages before we dive into the detail:
We estimate '17 cash EPS accretion would be ~10-12% for Visa Inc. if the put option was exercised at a
$20 B price, or ~ 35 cents on our forecasted FY17 EPS of $3.55 (Exhibits 1 and 2)
We believe Visa Inc. could pay $20+ B for Visa Europe – we assume $20 B in our accretion estimates.
The major source of value for Visa Inc.