Justice Dept sues to block Visa from buying Plaid
The U.S. Justice Department on Thursday sued to block Visa's proposed $5.3 billion purchase of Plaid, a San Francisco-based provider of analytics software for accessing transaction data.
The bottom line: Plaid lets fintech startups connect to users' bank accounts, but the DOJ argues that the merger would eliminate Plaid's potential ability to compete in the online debit market, thus giving Visa a monopoly. Visa told WSJ it plans to "defend the transaction vigorously.”
Background: Plaid was founded in 2013, and is sometimes referred to as the fintech market's "plumbing" — kind of like Stripe, but a bit further down the payments infrastructure stack.
- The company raised more than $300 million in VC funding, most recently at a $2.3 billion post-money valuation in late 2018.
- Investors include Spark Capital, NEA, Kleiner Perkins Growth, NEA, Citigroup, Goldman Sachs, Index Ventures, and Andreessen Horowitz, Visa and MasterCard.
- The $5.3 billion sale price is said to include around $400 million tied to retention bonuses and other Plaid employee compensation.
- There were other bidders for Plaid, in addition to Visa, in part because there aren't really any other companies of the necessary scale that could serve as a viable Plan B.
A Plaid spokesperson declined comment.