Visa and Plaid terminate blockbuster merger

Cornelia Mascio
Gennaio 15, 2021

Visa (NYSE:V) has reportedly ended its takeover efforts of Silicon Valley start-up Plaid about two months after the Department of Justice filed an antitrust lawsuit on grounds that it would limit competition in the payments industry.

According to the complaint, the transaction would have enabled Visa to eliminate this competitive threat to its online debit business before Plaid had a chance to succeed, thereby enhancing or maintaining its monopoly. Visa has said the government failed to provide "a shred of detail" about how Plaid's products would ultimately compete with the payments behemoth. "Therefore, we decided not to devote more time to this acquisition".

The case was scheduled for trial on June 28 in the US District Court for the Northern District of California.

Visa has abandoned its $5.3 billion bid to acquire fintech startup Plaid. Visa shares are up 0.2% in Wednesday morning trading while Mastercard shares are up 1.1%. The stock has climbed 6.9% since it announced the deal with Plaid, compared with the 35% advance of the S&P 500 Information Technology Index.

"Since founding Plaid 8 years ago, we have been maniacally focused on expanding access and improving financial outcomes for consumers, developers, and financial institutions - and the intent of joining Visa was to accelerate that work". The company now has more than 4,000 customers, including Alphabet Inc.'s Google and Microsoft Corp. Set against the context of the coronavirus pandemic and the banking sector's rapid embrace of digital interaction, the startup's CEO and co-founder Zach Perret said "hundreds of banks" also joined the platform in 2020.

Kelly told analysts his company could partner with Plaid to offer Visa's services to fintechs.

"We are confident we would have prevailed in court as Plaid's capabilities are complementary to Visa's, not competitive", he added.

Visa's debit business has been facing mounting scrutiny from antitrust regulators.

The DOJ filed a civil antitrust lawsuit in November to block Visa's acquisition of Plaid. Visa's 2019 revenues were approximately US$ 23 billion.

Visa and Plaid have terminated their $5.3bn acquisition agreement after United States authorities filed a legal challenge against the deal.

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