Visa, Plaid terminate $5.3B merger amid DOJ antitrust lawsuit

Visa Inc. and Plaid Inc. have terminated their merger agreement and agreed with the U.S. Department of Justice to dismiss the litigation related to the proposed transaction.

The Justice Department in November 2020 had filed an antitrust lawsuit against Visa's proposed acquisition of Plaid, alleging competitive concerns.

Visa Chairman and CEO Alfred Kelly Jr. said in a news release that the company was confident it would have "prevailed in court as Plaid's capabilities are complementary to Visa's, not competitive," but added that "protracted and complex litigation will likely take substantial time to fully resolve."

Plaid CEO and co-founder Zach Perret said Plaid will instead work with Visa as an investor and partner going forward.

The companies announced the transaction, valued at a total of $5.3 billion including retention equity and deferred compensation equity, in January 2020.

On a conference call with analysts to discuss the termination, Kelly said calling the merger off had no financial cost for the company and no termination fee because the decision was mutual between both Visa and Plaid.

When asked if Visa was pursuing other M&A to substitute for the terminated deal, Kelly said the company prefers to build organically, then turn to partnerships before seeking M&A. Kelly also expressed confidence that Visa would be able to pursue its strategy of working with financial technology developers as a partner with Plaid rather than as a combined company.