Visa to buy fintech start-up Plaid in a $5.3 billion deal
According to an announcement made on Monday, Visa Inc has agreed to buy privately held software start-up Plaid Inc in a $5.3 billion deal. The acquisition will boost the payment giant’s access to the booming financial technology space.
The $5.3 billion price acquisition deal is double what Plaid was reportedly valued at during its last fundraising, when it took a $250 million Series C round that was announced in December 2018. It was later revealed by Plaid that both Visa and rival Mastercard Inc were investors in that round.
The transaction sets yet another example of how traditional financial firms are willing to acquire businesses which have established strong positions servicing the digital and cashless economy.
Plaid’s technology lets people link their bank accounts to mobile apps such as Venmo, Acorns and Chime. The San Francisco-based firm says that its systems have been used by one in four people with a U.S. bank account.
“Plaid is a leader in the fast growing fintech world,” Visa Chairman and CEO Al Kelly said in Monday’s statement. “The acquisition, combined with our many fintech efforts already underway, will position Visa to deliver even more value for developers, financial institutions and consumers.”
Plaid, founded in 2013 and currently connecting with over 11,000 financial institutions across the United States, Canada and Europe, will be able to use the acquisition to leverage Visa’s global brand in expanding its own business.
Visa expects the deal to close in the next three to six months and benefit its adjusted earnings per share at the end of the third year. It is said to fund the deal using cash on hand as well as debt that will be issued at a later date.
The acquisition would not impact upon Visa’s previously announced stock buyback or dividend plans.
Visa and Plaid respectively used Lazard and Goldman Sachs as their financial advisors.