Visa, in Reversal, Plans to Go Public

Following the lead of MasterCard Inc., competitor Visa announced Wednesday that it planned to restructure its organization to create a new company and sell shares in an initial public offering.

The move announced by San Francisco-based Visa, operator of the world’s largest consumer credit card payment system, follows MasterCard’s move in May to go public.

Since the IPO, shares of the No. 2 card issuer have soared from an opening day price of $46. They’ve been so strong that several analysts downgraded the stock this week as overvalued. On Wednesday, they dropped $2.41 to $69.50.

Visa initially said it wouldn’t follow MasterCard’s lead and, instead, sought to add more independent directors to its board and modify its operating rules.

In its announcement, the company did not say why it had changed that view.

“This is a great time in Visa’s history to make this transition -- we continue to be a leader in the payments industry, our growth and emerging market strategies are succeeding, and the growth potential in the global payments industry is tremendous,” William I. Campbell, Visa International’s board chairman, said in a statement. “We expect that the new structure will accelerate Visa’s growth and position us to better serve our financial institutions and merchants.”

Visa is currently a private membership association jointly owned by more than 20,000 financial institutions around the world.

There are more than 1.4 billion Visa cards worldwide, the company said. Visa products currently log more than $4 trillion in sales worldwide, it added.

MasterCard, which is headquartered in Purchase, N.Y., has about 750 million cards worldwide with gross dollar volume of purchases totaling $1.7 trillion in 2005.

A stock offering could be launched in 12 to 18 months, Peter Hawkins, the head of Visa’s restructuring committee, told reporters Wednesday.

In the first step, a new company called Visa Inc. will be created through a series of mergers involving Visa Canada, Visa USA and Visa International, which includes the regions of Asia Pacific, Latin America and the Caribbean, Central and Eastern Europe and the Middle East and Africa.

Visa Europe will remain a membership association.