NEW YORK – Visa, the world's largest credit card network, unveiled details of a planned restructuring Friday as it prepares by early next year to follow smaller rival MasterCard Inc. (MA) in becoming a public company.
San Francisco-based Visa also disclosed financial results for the publicly traded entity to be known as Visa Inc., which will combines Visa USA, Visa International and Visa Canada.
Visa first outlined plans last October to float a majority of the company, now owned by its member banks, in an initial public offering to be held within 12 to 18 months. Its Visa Europe affiliate will remain a membership association and take a minority stake in Visa Inc.
The company intends to use IPO proceeds to fund expansion and help pay potentially hefty legal bills as merchants such as Kroger Co., Safeway Inc. and Walgreen Co.
accuse the card networks of price fixing.
According to a Securities and Exchange Commission filing, Visa Inc. posted net income of $525.9 million, or 68 cents per share, on operating revenue of $2.36 billion for the six months ended March 31. Visa USA accounted for more than two-thirds of that combined entity's profit and revenue.
Over the same period, MasterCard reported a profit of $255.8 million on net revenue of $1.75 billion. Its shares have more than quadrupled since that company went public in May 2006.
Visa Chief Executive Joseph Saunders said in a letter to member banks that the restructuring should help Visa compete more effectively, streamline decision-making and better coordinate worldwide operations.
The SEC filing also shows that Visa USA members will assume responsibility for a variety of litigation, including the merchant antitrust lawsuits. Visa USA recently had some 13,320 member banks that have issued more than 521 million cards.
Saunders was installed as chief executive last month. He had previously been president of card services at Washington Mutual Inc., the largest U.S. thrift.
Visa's roots date to 1958 when a Bank of America Corp. predecessor created the blue, white and gold BankAmericard, helping pave the way for the modern credit card business. That card has evolved into Visa.
Another card-related offering is set to debut in early July, after Morgan Stanley spins off its Discover Financial Services unit, a rival to Visa and MasterCard. Discover will also join the Standard & Poor's 500 stock index .