The news comes almost a year to the day after the $5.3bn offer for Plaid was first put on the table.
Silicon Valley startup Plaid and payments giant Visa last night nixed plans for the fintech's upcoming acquisition.
In a blog post, CEO and co-founder Zach Perret wrote: "Since founding Plaid eight years ago, we have been maniacally focused on expanding access and improving financial outcomes for consumers, developers, and financial institutions—and the intent of joining Visa was to accelerate that work."
"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."
The decision, which was mutual, comes after the Department of Justice (DOJ) in the US sued to block the deal in November, citing the possibility that Visa would maintain an unlawful monopoly in the online digital debit card market.
“Plaid and Visa would have been a great combination, but lengthy litigation would interrupt, not accelerate, the work we are doing to build the infrastructure supporting fintech. We’ll continue to work with Visa as an investor and partner,” the tweets read.
“Our top priority remains the thousands of customers and partners and millions of consumers who rely on our technology. We are excited about what we’ll build together.”
Visa and Plaid were later given the green light by the Competitions and Market Authority (CMA) towards the end of August last year after questions were initially raised about whether or not the deal would impact competition here in the UK.
At the time of the acquisition announcement back in January 2020, Al Kelly, CEO and Chairman of Visa, said the deal was a "long-term play" that would position Visa for the next decade, helping it bolster its relationship with fintech companies, with the payments giant currently having stakes in the likes of Klarna, Revolut and Global Processing Services (GPS).
As news broke last night, Kelly told the Wall Street Journal that both he and Plaid thought they would eventually win the ongoing legal battle: "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.”
Plaid’s decision to pull out of its multi-billion-dollar takeover deal is certainly a novel approach to the hard-to-navigate world of mergers and acquisitions, but it isn’t the first time to have happened and it certainly won’t be the last.