MasterCard & American Express Settle Litigation (MA, AXP)

MasterCard Incorporated (NYSE: MA) has just announced it has reached an agreement to settle its outstanding litigation with American Express (NYSE: AXP).  The company says the tax-affected net present value of the settlement will be $1 Billion.

The agreement calls for 12 quarterly payments by MasterCard to American Express starting in Q3-2008 of $150 million per quarter.  The payments are contingent upon the performance of American Express’s U.S. Global Network Services business.

MasterCard will take a charge for the settlement in the current quarter and it has noted that the maximum nominal amount of the settlement is $1.8 Billion.

Jon C. Ogg
June 25, 2008