Visa, Plaid call off merger

Visa and Plaid have canceled their merger negotiations after the U.S. federal government took steps to stop the deal on antitrust concerns.

Reuters reported:

Visa and financial technology company Plaid said on Tuesday that they would terminate their $5.3 billion merger agreement following a U.S. government lawsuit aimed at stopping the proposed transaction on antitrust grounds.

The U.S. Justice Department had sued to stop the deal in November, saying that Visa was a “a monopolist in online debit transactions” and that the proposed acquisition “would eliminate a nascent competitive threat” to that monopoly.

CNN’s Jazmin Goodwin wrote:

In a statement announcing merger’s end Tuesday, Visa CEO Al Kelly cited “protracted and complex litigation” that would take “substantial time to fully resolve.”

The companies said the DOJ agreed to drop its lawsuit.

Kelly said he was confident Visa would have ultimately won the legal battle for the deal, and that he believes Plaid’s capabilities as “complementary” and “not competitive.”

Plaid makes digital infrastructure linking financial data from people’s bank accounts to the apps they use to manage their money such as Venmo, Coinbase and Expensify.

Alex Wilhelm from TechCrunch reported:

While the Visa-Plaid deal was merely a single transaction, its scuttling doesn’t bode well for other fintech startups and unicorns that might have eyed an exit to a wealthy incumbent. The Department of Justice, in other words, may have undercut the chances of M&A exits for a number of fintech-focused startups or at least created more skittishness around that possible exit path.