PURCHASE, N.Y., Oct 27, 2008 /PRNewswire via COMTEX/ — MasterCard Incorporated today announced that final agreement has been reached to settle outstanding litigation brought against MasterCard and Visa by Discover Financial Services. As a result, MasterCard will take a net after-tax charge of $515.5 million in the third quarter of 2008.
MasterCard will pay $862.5 million of the total $2.75 billion settlement reflecting the terms of a judgment-sharing agreement with Visa that was finalized in July, 2008. In addition, in connection with the settlement, Morgan Stanley, Discover’s former parent company, agreed to pay MasterCard $35 million, resulting in a net settlement of $827.5 million. MasterCard will make its payment to Discover and receive the payment from Morgan Stanley in November.
“We believe Discover’s lack of success resulted from decisions that created a business model that is not attractive to bank issuers. Nonetheless, we chose to settle this lawsuit to avoid the uncertainty and distraction of a lengthy jury trial. This result, which is in no way an admission of liability, is in the best interest of our shareholders, our customers and our company,” said MasterCard General Counsel Noah J. Hanft. “We will continue to focus on out-competing Discover in the marketplace, where real-world performance is what counts.”
About MasterCard Incorporated
MasterCard Incorporated advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchant worldwide. As a franchisor, processor and advisor, MasterCard develops and markets payment solutions, processes over 18 billion transactions each year, and provides industry-leading analysis and consulting services to financial institution customers and merchants. Through its family of brands, including MasterCard(R), Maestro(R) and Cirrus(R), MasterCard serves consumers and businesses in more than 210 countries and territories. For more information go to www.mastercard.com.