Visa drops plans to acquire Plaid after DOJ antitrust lawsuit

Visa and Plaid call off $5.3B merger citing DoJ pushback

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

News of the the merger's death sent Twitter afire with speculation that Plaid could become an acquisition target by a special-purpose acquisition company, or SPAC, with some users predicting that so-called "SPAC King" investor Chamath Palihapitiya will pursue Plaid with his fifth SPAC after using his fourth to do a $8.65 billion deal with fintech darling SoFi.

Visa has abandoned its $5.3 billion bid to acquire fintech startup Plaid.

"In a victory for American consumers and small businesses, Visa has abandoned its efforts to acquire an innovative and nascent competitor", assistant attorney general Makan Delrahim said. 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. The company now has more than 4,000 customers, including Alphabet Inc.'s Google and Microsoft Corp. The start-up has raised more than $300m from investors including Goldman Sachs, Andreessen Horowitz and Google's GV. 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.

Founded in 2013, Plaid offers a financial application programming interface that connects apps and services with financial services.

"We believe the combination of Visa with Plaid would have delivered significant benefits", Visa chief Al Kelly said in a statement.

Visa denied the assessment, arguing that it "reflects a lack of understanding of Plaid's business" on the part of the DOJ. In 2019 Visa's revenues were about $23 billion. The Federal Trade Commission issued a civil investigative demand a year ago seeking additional documents after the agency's Bureau of Competition began looking into whether Visa's actions prohibited merchants' ability to route certain payments over alternative debit networks. "Our debit business faces intense competition from a variety of players, including ten different debit networks and we face vigorous competition from other forms of payments, including cash, check and credit".

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