MasterCard, Europay agree to merge

MUNICH – MasterCard International and Europay International announced that their boards of directors have agreed in principle to combine their organizations into a unified global shareholder-owned corporation. Speaking at Europay’s annual membership meeting, MasterCard president and chief executive officer Robert W. Selander, and Europay chief executive officer Peter Hoch, sad the combination would deliver significant operating efficiencies and strengthened marketing and branding to their members globally.

MasterCard International has had a long-standing alliance with Europay, and currently owns a 12.2-percent share of Europay, and a 15-percent interest in EPSS, Europay’s processing subsidiary. In addition, MasterCard and Europay each own 50 percent of Maestro, the world’s leading global online debit program.

"This combination will be an important step toward becoming a seamless, global organization that can serve all financial institutions, whether they operate in one country, on one continent, or in diverse markets around the world," Selander said. "It brings together Europay’s particular strength in debit, chip and m-commerce, with MasterCard’s award-winning brand marketing expertise and strength in e-commerce and processing technology.

Hoch added: "This integration is the logical consequence of worldwide trends in consolidation and globalization, particularly in the payments industry. A regional scope is no longer good enough. The requirements of e- and m-commerce demand a global approach. Together, MasterCard and Europay will have increased strategic flexibility, improved economics of scale, strengthened consumer recognition and shorter time-to-market for innovative products and services."

Selander also said that in connection with the proposed integration with Europay, MasterCard would convert from a membership corporation to a private share corporation, MasterCard Inc., with MasterCard principal members and Europay shareholders becoming equity owners. The conversion to a private share corporation would facilitate the transaction with Europay, which is a private share corporation. It is also expected to more closely align the interests of MasterCard with those of its member-stockholders, because the value created by MasterCard for its member-stockholders will be reflected directly in the value of their shares.

Following completion of the transaction, Europay staff would provide the framework for the European region of MasterCard, which will continue to be based in Waterloo, Belgium. Hoch will retain his leadership role for the region and will report to Selander. As with all MasterCard regions, the European region will have its own board, which will make decisions on regional issues consistent with MasterCard’s global strategy.

"For example, under the umbrella of MasterCard there is a full range of payment programs available for the use of member banks," Hock said. "In Europe, financial institutions continue to have the choice to promote the well-recognized Eurocard name along with the MasterCard brand, if they consider it appropriate for their markets."

The integration of MasterCard and Europay has been approved in principle by each company’s board of directors, and will be submitted to their respective constituents for approval. MasterCard’s share conversion will be subject to approval by a majority of MasterCard International’s principal members, and each Europay shareholder will be asked to agree to exchange its shares in Europay for shares of MasterCard Inc., in connection with the integration.