Visa Scraps $5.3 Billion Plaid Acquisition

Visa and Plaid said on Tuesday that they would terminate their merger agreement following a lawsuit in the US government targeted at halting the offer on antitrust grounds.

The Visa-Plaid deal was valued at $5.3 billion during the time of its announcement on 13 January 2021, almost a year to the day just before its cancellation. The Department of Justice sued to bar the offer in November for the reason that Visa was “a monopolist in online debit transactions” and that it is purchase of Plaid “would eliminate a nascent competitive threat” to its monopoly.

At the time Visa said that the DOJ lawsuit was “flawed”. Visa chairman and CEO Al Kelly reiterated his opinion that the acquisition was lawful within the company's Tuesday statement. “We are confident we'd have prevailed in court as Plaid's capabilities are complementary to Visa's, not competitive,” he said.

Kelly said that the deal ultimately had to be pulled because “protracted and complex litigation will probably take substantial time to fully resolve.”

Plaid CEO Zach Perret struck a more optimistic note in the statement. “While Plaid and Visa will be a great combination, we have chose to instead work with Visa as an investor and partner so we can fully focus on building the infrastructure to aid fintech,” he said.

Plaid is really a San Francisco-based fintech startup which is used by popular apps such as Robinhood, Venmo and Square Cash to connect users for their bank accounts. By acquiring Plaid, Visa could have been able to access the company's growing subscriber base and sell them additional services.

Fintech enjoyed a widespread surge in value in 2021, with Perret reporting “an unprecedented uptick in demand” for Plaid's services. The fintech firm says that it's grown its customer base to 4,000 companies, a rise of 60% from the last year.