In a move that has sparked mixed reactions from Wall Street analysts, Visa Inc (NYSE:V). is currently in talks with its shareholders regarding a potential exchange offer. This proposition, announced after market hours on Wednesday, would allow major banks to convert up to 50% of their non-publicly traded class B shares into publicly traded class A shares listed on the New York Stock Exchange (NYSE).
The three-tier common stock structure of Visa, which includes Class A, B, and C shares, was established during its initial public offering in 2008. Class B shares are held by domestic banks and Class C shares by non-U.S. banks, with neither being publicly traded. The creation of class B stock served to shield class A and C shareholders from certain pre-IPO litigation.
Analysts have differing views on the proposed exchange. James Faucette of Morgan Stanley (NYSE:MS) believes that the potential exchange would be beneficial to all of Visa's shareholders. He maintains that for class A and C shareholders, such an exchange would alleviate uncertainty regarding the conversion and eventual public trading of class B shares. Faucette maintains an Overweight rating for Visa stock with a price target of $292.
On the other hand, Trevor Williams from Jefferies suggests that the proposed exchange could create an overhang for the stock. Despite this concern, Williams rates Visa stock as Buy with a price target of $280.
The news appears to have had an immediate impact on Visa's stock performance. On Thursday, Visa's stock plunged by 2.7% to $241.49, marking it as the worst performer in the Dow Jones Industrial Average and the second-worst performer in the S&P 500.
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