Visa paying $2B for payments processor CyberSource

Visa Inc. will pay $2 billion cash to buy e-commerce payment processor CyberSource Corp., the companies said Wednesday.

CyberSource's fraud prevention technology is expected to help Visa to increase online use of the credit, debit and prepaid cards that bear its name.

Visa is also aiming at the growing mobile payments market worldwide.

The purchase price of $26 per share represents a 34 percent premium over Mountain View, Calif.-based CyberSource's closing price Tuesday.

In premarket electronic trading, CyberSource shares shot up $3.56, or 18 percent, to $23. Visa shares, which closed at $94.05 Tuesday, lost 85 cents in light premarket trading.

The companies have worked together since 1999, and currently collaborate on risk models built into CyberSource's automated fraud management.

CyberSource currently plays a role in about 25 percent of all online commerce transactions in the U.S. It earned $11 million in 2009 on revenue of just over $265 million.

For 2010, the company forecast profit between $14.5 million and $15 million on revenue between $310 million and $315 million.

The deal requires approval from CyberSource shareholders. Both boards have approved the deal, which is expected to close in Visa's fourth quarter, which ends Sept. 30.

Visa expects the deal to cut 4 to 5 cents a share off its fourth-quarter profit.

It is slated to report fiscal second-quarter results April 28. Wall Street expects a second-quarter profit of 91 cents a share on revenue of $1.93 billion.

"As e-commerce increasingly migrates to mobile devices, we believe the combination of Visa and CyberSource technology and services will position Visa to lead in mobile e-commerce," said Visa Chairman and CEO Joseph W. Saunders.

CyberSource President and CEO Michael Walsh will continue to oversee operations.