MasterCard IPO Beckons

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WALL STREET - (05/22/06) – MasterCard International, thecard company controlled by the big banks, is expected to raise asmuch as $2.8 billion this week in the biggest initial publicoffering in more than two years. MasterCard, which is owned by1,400 banks, will use all but $650 million of the proceeds to buyback shares from its bank owners, leaving a majority ownership,about 51%, in public hands after the IPO. The remaining proceedswill be used to fund new initiatives and help build up a legaldefense fund that will be used in the event of adverse legalrulings in the more than 40 antitrust suits pending from merchants.Four big banks, JP Morgan Chase, Citibank, Bank of America andHSBC, own more than 30% of MasterCard, while those four, plusCapital One, comprise the majority of the company’s business.Observers say the IPO could position MasterCard as a potentialtakeover target after its legal issues are resolved, with BofAexpressing interest in creating its own payments system, and Citiand JP Morgan Chase also believed to be interested. MasterCardshares are expected to be priced between $40 and $43.

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