Visa Makes A POWER Move in eCommerce, Acquires CyberSource…I Dunno, Should PayPal Worry?

SAN FRANCISCO and MOUNTAIN VIEW, Calif., April 21 /PRNewswire-FirstCall/ — Visa Inc. (NYSE: V) ("Visa") and CyberSource Corporation (Nasdaq: CYBS) ("CyberSource") today announced that they have entered into a definitive agreement for Visa to purchase CyberSource, a leading provider of electronic payment, risk management and payment security solutions to online merchants at a price of $26.00 per share, or total consideration of approximately $2.0 billion to be paid with cash on hand.

CyberSource is an established industry leader that plays a role in processing approximately 25 percent of all eCommerce dollars transacted in the United States.  The company serves more than 295,000 merchants through its CyberSource and Authorize.Net branded solutions.  CyberSource clients include British Airways, Home Depot, Facebook, Google and many small businesses.

The acquisition of CyberSource will result in a compelling combination whose assets and expertise are expected to drive long-term growth by: 

• Accelerating the growth of the eCommerce category thereby also increasing the usage of Visa debit, prepaid and credit products for online purchases.
• Drawing on Visa’s financial institution relationships and global presence to more rapidly drive international expansion of CyberSource’s products and services.  Today the majority of CyberSource’s revenues are generated inthe United States, leaving tremendous opportunity for global growth.
• Building on CyberSource’s relationships with merchants to expand the adoption and enhance the functionality of other Visa eCommerce solutions such as Rightcliq.
• Delivering best-in-class fraud management services to accelerate adoption of CyberSource solutions.
• Increasing adoption of CyberSource’s secure payment data hosting solutions to address a growing merchant need.

These benefits will be realized by merchants and financial institutions alike.  Together, Visa and CyberSource will help merchants increase revenue through global growth while minimizing monetary loss from fraud and provide them with fast and efficient connectivity to multiple payment networks, including Visa. For financial institutions acquirers, Visa will deliver added value by providing new business referrals from eCommerce merchants.

"Online commerce continues to grow rapidly, and this acquisition will enable Visa to offer new and enhanced services that will better meet the growing demand among merchants globally for robust, secure online payment processing capabilities which in turn will grow the entire eCommerce category," said Joseph W. Saunders, Chairman and CEO of   Visa Inc.  "With CyberSource, we are adding a new suite of leading eCommerce capabilities and experience in addressing eCommerce merchant needs. And, as eCommerce increasingly migrates to mobile devices, we believe the combination of Visa and CyberSource technology and services will position Visa to lead in mobile eCommerce."

The two companies are a proven team, having partnered since 1999, and currently collaborate on risk models built into CyberSource’s automated fraud management solutions.

"By joining forces with the world’s foremost payments company, we will have the opportunity to utilize Visa’s regional expertise and global presence to drive international adoption of CyberSource in key geographies," said Michael Walsh, President and CEO of CyberSource Corporation. 

"We are excited to build on the existing relationship we have with Visa and extend the reach and capabilities of our eCommerce payment platform for small businesses and international brands around the world," said William S. McKiernan, Executive Chairman and Founder of CyberSource.

"The acquisition of CyberSource aligns with Visa’s long-term strategic plan to identify and invest in opportunities today that will drive future growth and deliver enhanced value to Visa and our clients," said Saunders.

Visa expects this transaction to be approximately $0.04 to $0.05 dilutive to its fiscal fourth quarter 2010 earnings per share on a GAAP basis, due to acquisition-related amortization and one-time transaction costs.  Visa expects this transaction to be slightly dilutive to its fiscal full-year 2011 earnings per share on a GAAP basis, primarily related to amortization of intangible assets.

CyberSource’s President and CEO, Michael Walsh, will continue to oversee CyberSource’s operations.  CyberSource’s Executive Chairman and Founder, William S. McKiernan, will join Visa as an Executive Advisor to assist in the integration of the two businesses.