Financial services company Visa has ended a planned merger with financial technology company Plaid after the $5.3 billion proposal was met with a legal challenge from the U.S. Department of Justice.
Visa and Plaid initially announced plans to merge last year. In November, the department filed a suit to block the deal on antitrust grounds. The department said the merger would result in the further monopolization of the online debit transaction segment by Visa. If the two companies merged, Visa would have access to a new financial service being developed by Plaid.
Visa's chief executive Al Kelly said the "protracted and complex litigation" was the main reason for the decision - though he was confident they would have ultimately won because the services and capabilities of both companies were undoubtedly "complementary" and presented no antitrust issues.
San Francisco-based Plaid mainly builds data transfer networks used by financial technology and digital financial services companies. The company's products enable third-party applications to connect with traditional bank accounts. Some of the companies that use their products include Venmo, Expensify and Coinbase.
Plaid said in light of the decision it will now simply work with Visa as a technological partner. Plaid is planning to concentrate on its core business of building digital infrastructures to support financial technology companies.
"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," the company said in a statement.