Visa and American Express Settle for $2.1 Billion

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Published at: www.reuters.com

Visa Settles Antitrust Lawsuit With AmEx for $2.1 Billion and Files Its $10 Billion IPO

November 12, 2007

Analysis by: GLG Expert Contributor

Since 2004, AmEx and Discover has battled with Visa and MasterCard over alleged exclusionary practices, which led to antitrust suits against both parties, contending they engaged in illegal practices to stifle competition. AmEx dropped its action against three of the bank defendants who became AmEx issuers, including Bank of America, Household Int'l and USAA Federal Savings Bank. Visa opted to settle the lawsuit with AmEx for $2.1 billion because Visa didn't want the suit hanging over its head in the midst of their pending IPO scheduled for early 2008. On Friday, 11.9.07, Visa filed its $10 billion much anticipated IPO with the SEC. As of 2006, Visa market share was 44% and Visa processed over 44 billion transactions worth $3.2 trillion. The new Visa Inc. will include the Canadian, US and Int'l operations and the European Unit will  take a minority stake in the new Visa. Barclays is the biggest Visa card issuer in Europe and is expected to gain a huge windfall from the deal.