Thursday, February 09, 2006

BREAKING NEWS....... MasterCard May Delay IPO (WSJ & Reuters)

Not to say we told you so first, and frequently, but.... - The Credit Card Interchange Report, has been expounding for months about the
reasons why MasterCard International's planned initial public offering might not materialize.

We were expecting that the financing would first be delayed and then cancelled. After all, how can the bank-owned card association make a compelling argument for investors to risk facing such enormous, potential exposure? From our prospective, the IPO was a mechanism for the banks to flick off their liabilities onto the public. From today's news accounts, the first part of our long-held assessment has apparently occurred.

Initially, the second largest credit card association was preparing to raise nearly
$2.5 billion dollars during a 1st quarter planned IPO. Several previous commentaries explained why this financing scheme might be extinguished.

Remember, MasterCard was planning to use upwards of $650 million from the proceeds to battle 30 Minute Photos Etc and the other plaintiffs lined up for this interchange war. We regularly opined that the MasterCard IPO structure would have burdened not the banks, but the shareholders with the nearly imminent legal antitrust liabilities.