Visa abandons its $5.3 billion bid to acquire Plaid
The appetite of card network giants for fintech acquisitions may be dampened after a Department of Justice antitrust suit prompted Visa to abandon its takeover of consumer open banking platform Plaid.
The acquisition of Plaid by Visa, which was valued at $5.3 billion, was proposed back in January 2020, prompting a lawsuit by the Department of Justice. In future, payment companies might move forward with partnerships rather than looking out for acquisitions in order to avoid such hurdles.
The Department of Justice (DoJ) on November 5th, 2020 had filed a civil antitrust suit against the merger of Visa and Plaid on the grounds that “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”.
The case was scheduled to trial in the U.S. District Court for the Northern District of California on June 28, 2021, but last week Visa and Plaid announced the mutual termination of the merger agreement.
“We are confident we would have prevailed in court as Plaid’s capabilities are complementary to Visa’s, not competitive,” said Al Kelly, Chairman and CEO of Visa Inc.
Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in the press release that “In a victory for American consumers and small businesses, Visa has abandoned its efforts to acquire an innovative and nascent competitor,” and added further that “Visa has abandoned its anticompetitive merger, Plaid and other future fintech innovators are free to develop potential alternatives to Visa’s online debit services. With more competition, consumers can expect lower prices and better services.”