VISA INC.

Visa Takes Decisive Step to Simplify Structure, Resolve Legal Overhang

Event Description Visa's Board of Directors has approved a special exchange offer for holders of its Class B-1 and Class B-2 common stock. Under this plan, Visa will exchange these existing Class B shares for a combination of new Class B-3 common stock (with transfer restrictions) and Class C common stock (which will be freely tradable). Visa designed both Class B-3 and Class C shares to be convertible into Visa's publicly traded Class A common stock under specific conditions.

This strategic move, part of a long-term plan outlined in December 2023, aims to manage and resolve the financial implications from long-running lawsuits concerning "interchange reimbursement fees." It also simplifies Visa's capital structure as these liabilities diminish. Visa created the original Class B shares during its 2008 IPO to hold the contingent liability from these lawsuits, with their conversion always tied to the resolution of these legal challenges.

Event Date/Timeline The Board authorized this plan on February 13, 2026. Visa outlined the underlying long-term plan in December 2023. Key conditions for this exchange offer include:

• More than a year passing since a previous stock offer.
• A reduction of at least 50% in the estimated financial risk from "interchange reimbursement fee" lawsuits compared to its October 1, 2023 level.

Visa anticipates meeting the 50% liability reduction condition with the expected dismissal of claims in a major case involving 7-Eleven. Following the satisfaction of this condition, Visa plans to file a detailed Form S-4 registration statement with the SEC. Visa will launch the actual exchange offer after the SEC reviews and declares the S-4 effective, and the company considers prevailing market conditions. This process will unfold over the coming months.

Impact Assessment

• Holders of Visa's Class B-1 and Class B-2 common stock: These shareholders will primarily participate in the exchange offer, receiving new Class B-3 and Class C shares.
• Visa Inc. itself: The company benefits significantly by resolving a major, long-standing legal overhang, reducing contingent liabilities, simplifying its complex multi-class stock structure, enhancing corporate governance, improving financial clarity, and potentially freeing up capital or reducing legal expenses.
• Investors in Visa's Class A common stock: While not directly participating in the exchange, the eventual conversion of Class B-3 and Class C shares into Class A common stock will lead to "voting dilution" for existing Class A shareholders. This means their percentage of ownership and voting power could decrease, which "could adversely impact the market price of our existing Class A common stock."
• The Payment Industry: Resolving these interchange fee lawsuits could set precedents or influence how these fees are structured and regulated in the future, impacting the broader payment ecosystem.
• Merchants/Retailers: The underlying resolution of the interchange fee lawsuits could affect them, though this specific event focuses on Visa's stock structure.

Financial Impact The exchange offer is contingent on a significant reduction in the estimated financial risk from "interchange reimbursement fee" lawsuits. Unresolved lawsuits involved an estimated $49.6 billion in October 2023. By October 2025, this figure dropped to about $39.4 billion. Visa anticipates reaching the 50% reduction target ($24.8 billion from the October 2023 figure) with recent lawsuit dismissals.

Resolving these liabilities should positively impact Visa's balance sheet and financial flexibility. However, the eventual conversion of the new Class B-3 and Class C shares into Class A common stock will result in voting dilution for existing Class A shareholders, potentially impacting the market price of existing Class A common stock. Visa hasn't yet provided the exact exchange ratio or the total number of Class B shares outstanding that could convert, so the full magnitude of this potential dilution remains to be seen.

Key Takeaways for Investors This event marks a significant step for Visa to streamline its corporate structure and address a long-standing legal challenge. Investors should closely monitor:

• Confirmation of Liability Reduction: Watch for the official announcement that the 50% liability reduction condition has been met, especially concerning the 7-Eleven lawsuit.
• Form S-4 Filing: This is a critical document. Once filed, it will provide definitive exchange terms, including exact ratios for Class B-1/B-2 shares into Class B-3/C, and the total Class A equivalent shares that could eventually be issued. This information is essential for assessing potential dilution for Class A shareholders.
• Market Reaction: Monitor the market's reaction to the S-4 filing and subsequent exchange offer, particularly Visa's Class A common stock price.
• Long-term Financial Impact: Consider how resolving these liabilities might impact Visa's long-term balance sheet, cash flow, and overall financial flexibility. This complex financial restructuring requires careful attention to emerging details.