Mastercard and Europay, the privately owned credit and debit card networks, have agreed the outlines of a merger designed to bolster Mastercard's position against arch-rival Visa, the Financial Times reported Monday, March 12. Under the all-share proposal, the European banks that control Europay are expected to be offered new shares representing between a quarter and a third of Mastercard, which will remain based in Purchase, New York, the report said.
If the deal is approved by shareholders it will create the world's largest debit card network and be second to Visa in credit cards. The two boards believe a merger would help cut costs and align European and US strategies, the Financial Times said, adding that negotiations have been going on since early last year, when Europay considered several possible deals to form a global group.
The paper said the directors of Europay were confident that shareholders will back the deal, which it said would give Europe's banks a handful of guaranteed seats on the board of Mastercard. But the two groups are not planning to announce the agreement for some time, with one option being to wait for the biannual members' get-together in Munich in June, the report added.
Mastercard and Europay provide the processing platforms for card brands such as Mastercard, Maestro and Eurocheque, set the rules under which banks may issue the cards and run expensive marketing and advertising operations. Both are run as not-for-profit businesses designed to benefit the banks that control them. —(AFP)
© Agence France Presse 2000
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