Published: Fri, January 15, 2021
Economy | By

Visa abandons $5.3 billion acquisition after DOJ objections

Visa abandons $5.3 billion acquisition after DOJ objections

Visa has said the government failed to provide "a shred of detail" about how Plaid's products would ultimately compete with the payments behemoth.

The Justice Department on Tuesday called the companies' decision "a victory for American consumers and small businesses".

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

Visa announced its acquisition in January 2020, but the deal was held up by the DoJ review.

V shares started out Wednesday up $1.32 to $210.18. The start-up has raised more than $300m from investors including Goldman Sachs, Andreessen Horowitz and Google's GV.

"This past year saw an unprecedented uptick in demand for the services powered by Plaid, and our priority is to support the hundreds of millions of people who now rely on fintech", Perret said. Unfortunately, the pace of a multi-year regulatory review is not compatible with the fast-moving realities of a startup - and delaying close another year or more is not in the best interest of our customers, the financial system, or consumers themselves. "We've really enjoyed getting to know the Visa team and getting to learn from them and I'm eager to find ways to continue to work with them".

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

In a separate statement, Visa Chief Executive Al Kelly said he believed that the companies would have eventually won a legal battle because Plaid's services were complementary to Visa's.

Visa's debit business has been facing mounting scrutiny from antitrust regulators. In 2019 Visa's revenues were about $23 billion. The probe resulted in the department announcing in November that it was suing Visa on the grounds that the deal amounts to an attempt to eliminate a nascent competitive threat in violation of both the Sherman Antitrust Act and the Clayton Antitrust Act. Plaid, a successful fintech firm, is developing a payments platform that would challenge Visa's monopoly. Its capabilities seem a natural fit for Visa's mammoth payments network.

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