Summary
Mastercard Incorporated (MA) has filed an 8-K report on October 27, 2008, announcing the resolution of significant litigation with Discover Financial Services ("Discover") and Visa, Inc. ("Visa"). This settlement concludes all ongoing legal disputes between these entities. A key component of the agreement involves Mastercard making a payment of $862.5 million to Discover in November 2008, a payment structure that aligns with a prior judgment-sharing agreement with Visa. Importantly for investors, Mastercard will receive a $35 million payment from Morgan Stanley, Discover's former parent company, as part of this settlement. This results in a net settlement cost for Mastercard of $827.5 million. The company has also included its press release regarding this settlement as an exhibit to the filing, which provides further details on this material event that removes considerable legal uncertainty.
Key Highlights
- 1Mastercard entered into a Release and Settlement Agreement with Discover Financial Services and Visa, Inc. on October 27, 2008.
- 2The settlement resolves all outstanding litigation between Mastercard and Discover.
- 3Mastercard will pay $862.5 million to Discover in November 2008.
- 4This payment is in line with a pre-existing judgment-sharing agreement with Visa.
- 5Morgan Stanley, Discover's former parent, will pay Mastercard $35 million.
- 6The net settlement cost for Mastercard is $827.5 million.
- 7A press release detailing the settlement is included as an exhibit.