Yahoo Finance JPMorgan (JPM) to Recognize $8B Gain From Visa Share Exchange
JPMorgan JPM will recognize accounting gains of almost $8 billion in the second quarter of 2024 as part of a share exchange deal with Visa Inc. V.
This January, Visa, in a Securities and Exchange Commission filing, announced receipt of its shareholders' approval to amend its Certificate of Incorporation “that redenominated the Visa Class B common stock to Visa Class B-1 common stock.” The shareholders also authorized V to conduct one or more exchange offers. The company’s unique share structure – three share classes – was planned to ensure that banks that owned Visa before the IPO would still be on the hook to cover costs arising from its long-running litigation with major U.S. merchants.
Hence, under the plan (commenced on Apr 8), JPMorgan tendered its 37.2 million shares of Visa Class B-1 common stock in exchange for a combination of Visa Class B-2 common stock and Visa Class C common stock. On May 6, Visa announced acceptance of nearly 240.7 million shares of its Class B???1 common stock tendered in the exchange offer.
The acceptance by Visa resulted in the above-mentioned gain for JPM, which is related to the Visa Class C common stock, which is held at fair value. Further, JPM noted that Visa Class B-2 common stock will be “held at the nominal carryover basis of the tendered Visa Class B-1 common stock.”
Additionally, in the latest quarterly filing, JPMorgan stated that the Visa Class B-2 common stock will remain subject to transfer restrictions. Notably, once a brief lock-up period expires, the company will be eligible to sell the Visa C common stock received as part of the exchange offer.
Over the past year, shares of JPM have rallied 40.1%, outperforming the industry’s growth of 38.5%.
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Currently, JPMorgan carries a Zacks Rank #3 (Hold).
A better-ranked major regional bank is Wells Fargo WFC. The company, at present, sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WFC’s earnings estimates for 2024 have been revised 5.3% upward in the past month. Shares of Wells Fargo have jumped 46.9% over the past six months.
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