Visa Inc. and financial technology startup Plaid announced on Tuesday that they have terminated their merger plans following antitrust backlash from the Justice Department.
Visa V,
Chief Executive Al Kelly said in a press release that while he was’ certain ‘that the payment giant would have succeeded in the antitrust lawsuit filed by the Justice Department, he believed that’ lengthy and complex lawsuits’ likely ‘would would have taken to dissolve completely. Visa and Plaid reached an agreement with the Justice Department to dismiss the lawsuit regarding the proposed deal.
Shares of Visa fell 0.9% on Tuesday during out-of-hours trading.
Visa announced a $ 5.3 billion deal for Plaid on January 13, 2020. The company was keen to partner with a new payment technology player that would allow people to connect their bank accounts to popular fintech platforms such as PayPal Holdings Inc.’s PYPL,
Venmo.
The Justice Department has accused Visa of planning to acquire Plaid to eliminate an emerging threat to its dominant debit company.
“We are focused on accelerating our business by continuing our broader strategy and continuing to drive Visa’s three growth pillars: consumer payments, new flows and value-added services,” Kelly said in the Visa publication.
Zach Perret, CEO of Plaid, said his company has seen “an unprecedented rise in demand” for its services in the past year. “While Plaid and Visa would have been a great combination, we decided to instead work with Visa as an investor and partner so that we can fully focus on building the infrastructure to support fintech.”
Visa shares are up 1.2% in the past three months as the Dow Jones Industrial Average DJIA,
added 7.7%.