Visa Stock Falls as Analysts Weigh in on Potential Exchange Offer

Introduction

Visa stock is tumbling Thursday as analysts weighed in on the possible outcome of a potential exchange offer for shares held by banks.

Visa’s Exchange Offer

Visa (ticker: V) announced after the market close on Wednesday that the card company is in discussions with stockholders to possibly allow big banks to exchange up to half their shares of Visa’s class B stock into class B-2 shares and C shares. The class C shares could then convert into class A shares and be sold, with certain restrictions. If the plan moves forward, holders of all class A, B, and C shares will have an opportunity to vote on the required amendments, Visa said.

Three-Class Common Stock Structure

Visa created a three-class common stock structure composed of Class A, B, and C shares with its 2008 initial public offering. The Class B stock was created to protect class A and class C holders from certain pre-IPO litigation.

Analyst Opinions

Morgan Stanley analyst James Faucette believes the potential exchange offer would be advantageous for all of Visa’s stockholders. He states that it would reduce the overhang related to the uncertainty of when and how class B shares eventually become converted and publicly tradable float.

Jefferies analyst Trevor Williams, on the other hand, believes that the exchange would create an overhang for the stock.

Stock Performance

Visa stock is currently falling 2.7% to $241.49. It is the worst performer in the Dow Jones Industrial Average and the second-worst performer in the S&P 500.

Corrections & Amplifications

In Visa’s Potential Exchange Offer program, participating Class B holders would exchange their stock for a combination of newly created Class B-2 shares and Class C shares. A previous version of the article incorrectly said that the offer would allow half of Visa’s class B shares to be exchanged for class A shares.

Contact Information

For any further inquiries, please contact Angela Palumbo at [email protected].