Visa and Plaid Announce Mutual Termination of Merger Agreement

Rhea-AI Summary

Visa (NYSE: V) and Plaid have officially terminated their merger agreement and agreed to dismiss related litigation with the Department of Justice. Originally announced on January 13, 2020, the merger aimed to enhance Visa's offerings through Plaid's complementary capabilities. CEO Al Kelly expressed confidence in the benefits the merger would have brought but acknowledged the extensive time required to resolve the litigation. Both companies will shift focus to their respective growth strategies, with Visa continuing to expand consumer payments and value-added services, while Plaid emphasizes supporting fintech infrastructure.

Positive

• Visa's consumer payments segment grew nearly 70% over the past year.
• Value-added services revenue for Visa increased in the mid-to-high teens.
• Plaid experienced over 60% growth in customers and added hundreds of banks.

Negative

• Termination of the merger may limit strategic growth opportunities for Visa.
• Prolonged litigation could distract from core business focus.

Visa Inc. (NYSE: V) and Plaid today announced that the companies have terminated their merger agreement and agreed with the Department of Justice to dismiss the litigation related to the proposed transaction. The proposed transaction was first announced on January 13, 2020.

“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. “We believe the combination of Visa with Plaid would have delivered significant benefits, including greater innovation for developers, financial institutions and consumers. However, it has been a full year since we first announced our intent to acquire Plaid, and protracted and complex litigation will likely take substantial time to fully resolve.”

Mr. Kelly added, “We are focused on accelerating our business by advancing our broader strategy and continuing to drive Visa’s three growth pillars: consumer payments, new flows, and value added services. We have great momentum to build upon. Over the past year, our Visa Direct solution moved money around the world using multiple card, ACH and RTP networks, growing nearly 70 percent. In addition, our value added services revenue has grown in the mid-to-high-teens. We have great respect for Plaid and the business they have built and look forward to our continued partnership.”

“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,” said Zach Perret, CEO and co-founder of Plaid. “We made great strides last year, growing our customers by more than sixty percent and adding hundreds of banks to our platform. While Plaid and Visa would have been a great combination, we have decided to instead work with Visa as an investor and partner so we can fully focus on building the infrastructure to support fintech.“

Webcast and Conference Call Information

Visa’s executive management team will host a live audio webcast beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today to discuss the announcement. All interested parties are invited to listen to the live webcast at http://investor.visa.com. A replay of the webcast will be available for 30 days. Investor information is also available at http://investor.visa.com.

About Visa Inc.

Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network - enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. Our relentless focus on innovation is a catalyst for the rapid growth of digital commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information, visit usa.visa.com/about-visa.html, usa.visa.com/visa-everywhere/blog.html and @VisaNews.

About Plaid

Plaid is a data network that powers the fintech tools millions of people rely on to live healthier financial lives. Plaid works with thousands of fintech companies like Venmo, SoFi, and Betterment, several of the Fortune 500, and many of the largest banks to make it easy for people to connect their financial accounts to the apps and services they want to use. Plaid’s network covers 11,000 financial institutions across the US, Canada, UK and Europe. Headquartered in San Francisco, the company was founded in 2013 by Zach Perret and William Hockey.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210112006080/en/

FAQ

Why did Visa and Plaid terminate their merger agreement?

Visa and Plaid terminated their merger agreement due to complex litigation with the Department of Justice, which would have taken significant time to resolve.

What will happen to Visa's growth strategy after the merger termination?

Visa plans to accelerate its business by focusing on its core growth pillars: consumer payments, new flows, and value-added services.

How did the cancellation of the merger affect Plaid?

Plaid will continue as an independent entity, focusing on building infrastructure to support fintech and will work with Visa as an investor and partner.

What was the initial purpose of the Visa and Plaid merger?

The merger aimed to combine Visa's and Plaid's capabilities to enhance innovation for developers, financial institutions, and consumers.

What were the results of Visa's financial metrics prior to the merger termination?

Visa's consumer payments grew nearly 70%, and its value-added services revenue increased in the mid-to-high teens over the past year.