Visa Inc. · NYSE:V
Visa — Merger or Acquisition (September 2007)
57 slides from Visa's merger presentation, Sep 13, 2007
Slide 1: Request for Member Approval
Filed by Visa Inc. Pursuant to Rule 425 under the Securities Act of 1933 Subject Company: Visa Inc. Commission File No. 333-143966 Request for Member Approval Review of the Restructuring Proposal and Visa Inc. 2007 Equity Incentive Compensation Plan Draft as of Sept. 12, 2007 Note: This deck may be
Slide 2: Introduction and purpose of today's discussion
Thank you for making time for today’s discussion. The intent of our meeting today is to brief you on Visa’s restructuring proposal. As you’ll hear today, we believe strongly that the proposed restructuring will enable Visa to compete more effectively and better serve you. And to that end, we hope yo
Slide 3: Filing of proxy statement-prospectus with the SEC
Visa has filed documents regarding the proposed restructuring with the SEC, including a registration statement on Form S-4 containing a proxy statement-prospectus. We urge members to read the definitive proxy statement-prospectus regarding the proposed restructuring and any other relevant documents
Slide 4: Read Legal Disclaimer
• [Read Legal Disclaimer]
Slide 5: Forward-looking statements
This presentation contains forward-looking statements. These statements may be identified by the use of words such as "will," "believes," "anticipates," "intends," "estimates," "expects," "projects," "plans" or similar expressions. Such forward-looking statements include, without limitation, stateme
Slide 6: Legal disclaimer and IPO questions guidance
[Read Legal Disclaimer] If asked about the IPO, generally reply “no comment.” If pressed, please make sure the member understands that we cannot say more than what is in the proxy statement-prospectus and there are no guarantees that Visa will ever conduct an IPO (refer to Q&A, page iii of the proxy
Slide 7: The Restructuring Proposal
The Restructuring Proposal • The restructuring agreement proposes a series of transactions by which Visa International, Visa USA and Visa Canada will become subsidiaries of Visa Inc. • Visa Europe will become a stockholder of Visa Inc. and will enter a series of contractual relationships that will g
Slide 8: Restructuring agreement announcement and structure
As a reminder, in June, we announced the signing of the restructuring agreement and our intention to restructure as a means to enable us to compete more effectively and better serve our customers. In the proposed restructuring, Visa USA, Visa Canada and Visa International will merge and become wholl
Slide 9: Restructuring Proposal: Recommended by the Boards of Directors
Restructuring Proposal: Recommended by the Boards of Directors The boards of directors of Visa International, Visa USA and Visa Canada have approved the restructuring agreement and recommend that their respective members approve the restructuring proposal 5
Slide 10: Board review process of the restructuring
This restructuring proposal is the culmination of a long and thorough review process by our regional boards around the world. Also note -- The boards of directors of Visa AP, Visa CEMEA and Visa LAC have determined that the restructuring is advisable and in the best interest of their respective memb
Slide 11: Restructuring Proposal: Financial Advisors
Restructuring Proposal: Financial Advisors • The restructuring proposal has been reviewed by financial advisors appointed by each of the boards of directors of Visa International, Visa Canada, Visa USA, Visa AP, Visa LAC and Visa CEMEA to provide them with an opinion with respect to the fairness of
Slide 12: Financial advisor fairness review
In addition to the approval of the participating members of the boards of directors from each region and Visa International who approved the global restructuring agreement, the agreement has also been reviewed by outside financial advisors who were selected by each region. Here in [REGION] we select
Slide 13: Changing to Compete More Effectively, Better Serve Our Customers
Changing to Compete More Effectively, Better Serve Our Customers Visa Inc. believes the proposed restructuring will: • Streamline decision making • Facilitate business growth • Enhance its ability to coordinate business on a global basis • Preserve its existing competitive advantages, such as its st
Slide 14: Reasons for undertaking the restructuring
Before we get into the details of the proposed restructuring, I’d like to remind you why we have undertaken this process. As described in the proxy statement-prospectus, we believe that we need to change to do a better job of competing more effectively and meeting the needs of our customers. Specifi
Slide 15: Visa Member Interests Following the Restructuring
Visa Member Interests Following the Restructuring • Eligible Visa members will have equity in Visa Inc. and non-equity interests in Visa International or Visa USA – Equity interests will represent voting and economic rights, and will be represented by common stock of Visa Inc. – Non-equity interest
Slide 16: Conversion of member interests to equity and non-equity interests
Interests of eligible Visa members will be converted to equity and non-equity interests in Visa International and Visa USA. Equity interests will represent your voting and economic rights and will be converted into common stock of Visa Inc. Your non-equity interest represents your commercial agreeme
Slide 17: Your Equity Interests
Your Equity Interests • As an eligible member of Visa [Region], you will receive a regional class of Visa Inc. common stock – Shares are initially allocated among all Visa regions • For participating regions this has been based on each region’s projected net income contribution for 2008 – Regional c
Slide 18: Initial regional share allocations
The initial regional share allocations have been based on projected 2008 net income contributions and also reflect the allocation of synergies and other considerations. These regional ownership numbers can be found in the proxy statement-prospectus, beginning on page 93. These regional class shares
Slide 19: Your Equity Interests cont.
Your Equity Interests cont. – Subsequently, each member's regional class shares will be converted into [For Visa USA: class B] [For Non-US members: class C] Visa Inc. common stock. The conversion ratio used will be based on: • The regional true-up process, which adjusts the allocation of shares amon
Slide 20: Allocation adjustment and true-up process
This initial allocation will be subject to adjustment based on the net fees and total volume of each member in proportion to the aggregate net fees and aggregate total volumes for all members within the applicable region during the period from Oct. 1, 2001 through the last day of the measurement per
Slide 21: Ownership Milestones
Ownership Milestones Solicitation Period Ownership Transition Eligible members receive proxy card that specifies approximate Targeted member consent number of shares they will be entitled to receive upon the closing of the restructuring and the delivery of their letter of Execute the letter of trans
Slide 22: Phased approach to ownership transition
A phased approach has been devised to carry us from our current state to our end state. This slide is designed to provide context for what will happen to your ownership interests during the phases of the transition. First, you are being asked to approve the restructuring proposal, and after you have
Slide 23: Governance Upon Completion of the Restructuring
Governance Upon Completion of the Restructuring Visa Inc. Board of Directors – Ten independent directors, who will comprise a majority – Visa Inc. CEO Joseph Saunders – Seven directors drawn from six Visa geographic regions (two from Visa USA, Visa Europe director will step down prior to an IPO of V
Slide 24: Visa Inc. board slate and independent directors
As our ownership structure changes, so too will our governance structure. Upon closing of the restructuring, Visa Inc.’s board will be composed of a majority of independent directors, meeting today’s best practices in corporate governance. •We recently announced our new slate of directors. In additi
Slide 25: Visa Inc.'s Relationship with Visa Europe
Visa Inc.’s Relationship with Visa Europe • Visa Europe will remain a separate entity; it will retain its current structure and will become a stockholder of Visa Inc. • Visa Europe will also become an exclusive licensee of Visa Inc.’s trademarks and technology in Visa Europe’s region • Visa Inc. and
Slide 26: Visa Europe membership structure and framework agreement
As discussed at the beginning of our conversation, Visa Europe will retain its member association structure and become a licensee of Visa Inc. Visa Europe will remain a separate entity focused on meeting the unique needs of its customers in the European market who support the European Union’s vision
Slide 27: Retrospective Responsibility Plan
Retrospective Responsibility Plan • The restructuring entails the establishment of mechanisms by which members of Visa USA will bear responsibility for liabilities related to the covered litigation • The retrospective responsibility plan provides for a variety of means to fund any judgment or settle
Slide 28: Covered litigation and escrow account
One of the reasons for pursuing the restructuring was to better position Visa to address the legal, regulatory and competitive issues arising in today’s marketplace. In the proxy statement-prospectus, we describe a plan by which upon the completion of a potential IPO, Visa Inc. will deposit a portio
Slide 29: Next Steps: Submit Your Approval
Next Steps: Submit Your Approval The [Visa International/USA/Canada] board of directors recommends that members approve the restructuring proposal 1 To submit your consent, complete and submit the proxy card 2 Execute your letter of transmittal, which is a condition to your receipt of Visa Inc. stoc
Slide 30: Closing remarks on submitting approval
We started today’s conversation by saying how important it is that you submit your approval of the restructuring proposal. I hope that I have successfully provided sufficient information to help you complete your evaluation of the proposed restructuring. If you haven’t had a chance, we recommend tha
Slide 31: Appendix
Appendix To be used selectively with Visa Legal present as co-presenter Note: This section includes supplemental slides that may be added to the main deck in response to specific areas of interest expressed by a member 16
Slide 32: Appendix: Table of Contents
Appendix: Table of Contents 1. Ownership percentages 2. Visa International Equity Allocation 3. True-Up Process 4. Equity Incentive Plan 5. Regionality 6. Visa’s Relationship with Visa Europe 7. Put/Call Option 8. Components of Retrospective Responsibility Plan 17
Slide 33: Supplemental slides guidance
Following are a series of slides that may be used to supplement the main solicitation deck. This content should be delivered in partnership with a representative from Visa Legal.
Slide 34: Ownership
Ownership Ownership approach Visa Inc. Ownership (pre-true-up)* • For the participating regions, the initial Visa USA(1) 57.06% allocation of Visa Inc. shares is based Visa AP 15.94% primarily on projected contributions to Visa LAC 10.73% FY08 net income to the overall Visa CEMEA 4.92% Visa enterpri
Slide 35: Initial ownership percentage by region
On this slide, you will see the initial ownership percentage of Visa Inc. for each participating region as well as Visa Europe. The initial regional share allocation is based on projected 2008 net income contributions and also reflect allocation of synergies and other certain considerations. Ownersh
Slide 36: Visa International Equity Eligibility Methodology
Visa International Equity Eligibility Methodology Includes: • Members eligible to receive Visa Inc. common stock of the applicable regional class must: – be a member of Visa International that is not sponsored by any other member of Visa International, Visa USA, Visa Europe or Visa Canada in one of
Slide 37: Equity allocation methodology
Re: Methodology. A consistent methodology for equity allocation has been developed for all Visa International members. It was considered and recommended for approval by the regional boards of AP, CEMEA, and LAC, and approved by Visa International. The methodology has been articulated in careful deta
Slide 38: Voting Allocation
Voting Allocation • [For Visa USA and Visa International] The voting power of members of is determined by the respective entity’s existing certificate of incorporation and bylaws, and applicable Delaware law. – This allocation is indicated on the proxy card that accompanied the proxy statement-prosp
Slide 39: What determines my voting power?
For more information, refer to page X of the proxy-statement prospectus: What determines my voting power? The voting power of members of Visa International and Visa USA is determined by the respective entity’s certificate of incorporation and bylaws, and applicable Delaware law. For members of Visa
Slide 40: True-Up Process: Key Steps
True-Up Process: Key Steps Determine measurement period and calculate actual Net Revenue for Step 1 each region Measure Actual Net Process began October 1, 2006 Revenue – Final period of measurement will be fiscal 2008 or the actual 4 quarters preceding the initial S-1 filing Step 2 Compare actual N
Slide 41: Reallocation of shares based on performance
In order to better reflect relative actual performance as compared with projections, there will be a reallocation of shares, or true-up, based on each region’s relative under- or over-achievement of its net revenue targets for the measurement period • The measurement period will be the four quarters
Slide 42: 2007 Equity Incentive Plan
2007 Equity Incentive Plan • Intended to promote our long-term success and increase stockholder value by attracting, motivating, and retaining our non-employee directors, officers, employees and consultants – Allows the flexibility to grant or award stock options, stock appreciation rights or SARs,
Slide 43: 2007 Equity Incentive Plan details
The 2007 Equity Incentive plan is intended to promote our long-term success and increase stockholder value by attracting, motivating, and retaining our non-employee directors, officers, employees and consultants and those of our subsidiaries and affiliates • allows the flexibility to grant or award
Slide 44: Regionality
Regionality • Pursuant to the restructuring agreement, Visa Inc., Visa USA, Visa Canada, Visa AP, Visa LAC and Visa CEMEA will develop internal Visa regional operating guidelines based on the following principles: – Visa Inc. will be organized around existing regional subsidiaries/ operating divisio
Slide 45: Regionality operating principles
[CONFIRM RELEVANCE TO TARGET MEMBER BEFORE INCLUDING] It’s important to stress that while Visa Inc. is becoming a single, global company, it remains committed to one of Visa’s greatest strengths – our regionality. We believe our local presence, knowledge and expertise in critical markets around the
Slide 46: Operations between Visa Inc. and Visa Europe
Operations between Visa Inc. and Visa Europe The relationship between Visa Inc. and Visa Europe will be governed by a framework agreement, which provides for trademark and technology licenses and bilateral services • Visa Europe will have exclusive, irrevocable and perpetual licenses to use the Visa
Slide 47: Framework agreement with Visa Europe
At the same time, the Visa enterprise expects to work seamlessly, enhancing interoperability, reliability and security for Visa members, customers, cardholders and merchants around the world. Visa Inc. and Visa Europe will enter into a framework agreement that will govern how the two entities will o
Slide 48: Put-Call Option
Put-Call Option • Put option allows Visa Europe to be acquired by Visa Inc. at Visa Europe’s option • Call option allows Visa Inc. to acquire Visa Europe upon certain catastrophic European business performance triggers • Valued on forward earnings, cost synergies, adjustments for non-recurring items
Slide 49: Put-Call Option details
Another important element of the restructuring proposal is the Put-Call Option. Our agreement with Visa Europe also includes a provision that will result in the integration of Visa Europe into Visa Inc. under two distinct scenarios, Under what is known as a “put option,” Visa Europe has the right to
Slide 50: Retrospective Responsibility Plan
Retrospective Responsibility Plan • The restructuring will eliminate general indemnities under Visa International by-laws and operating regulations, and will release members from claims by Visa International relating to the covered litigation • Settlements of, or final judgments relating to, the cov
Slide 51: IPO proceeds and escrow account
Upon the completion of the initial public offering of Visa Inc. common stock, we will deposit a portion of the net proceeds of the offering in an escrow account from which may be paid settlements of, or judgments relating to, covered litigation described in the proxy statement-prospectus. The net in
Slide 52: Retrospective Responsibility Plan: Non-US Member Considerations
Retrospective Responsibility Plan: Non-US Member Considerations • Judgment Sharing Agreements and Loss Sharing Agreement provide that the JSA and LSA signatories will share in a judgment enforced against Visa USA – Visa USA previously entered into a judgment sharing agreement with certain of its mem
Slide 53: Loss sharing agreement with Visa USA members
Visa USA, Visa International and Visa Inc. have entered a loss sharing agreement with some of the Visa USA members. • The loss sharing agreement provides that the Visa USA members that are parties to the agreement will be responsible for a proportionate share of the liabilities associated with the c
Slide 54: Retrospective Responsibility Plan: US Member Considerations
Retrospective Responsibility Plan: US Member Considerations • US members will be responsible for their “Membership Proportion,” a single calculation that defines ownership, voting rights and funding responsibility for retrospective cases • Responsibility will be commensurate with its membership prop
Slide 55: Class B common stock dilution and conversion
The shares of class B common stock that are retained by Visa USA members and that are not redeemed out of the proceeds of the initial public offering will be subject to dilution to the extent of the initial amount of the escrow account. This dilution of the shares of class B common stock will be acc
Slide 56: Retrospective Responsibility Plan (cont.)
Retrospective Responsibility Plan (cont.) Plan arranges for members to be released from indemnity obligations to Visa International related to covered litigation • Apart from US banks’ obligations for covered litigation, upon the restructuring, US members will be relieved of their indemnification ob
Slide 57: Retrospective responsibility plan funding mechanisms
As I said before, the retrospective responsibility plan put forth in the proxy statement-prospectus provides for a variety of means to fund any judgment or settlement in a covered litigation. As outlined in the restructuring agreement, this plan establishes mechanisms by which members of Visa U.S.A.