Visa stated Monday it agreed to buy privately held software program startup Plaid in a $5.3 billion deal that may boost the payments giant’s entry to the booming financial technology house.
The transaction highlights how traditional financial companies are willing to pay top greenback to purchase businesses that have secured strong positions servicing the digital and cashless economy.
Plaid’s technology enables individuals to link their bank accounts to mobile apps such as Venmo, Acorns, and Chime, with the San Francisco stationed company saying its systems have been utilized by one in four individuals with a U.S. bank account.
The $5.3 billion price given in Monday’s statement is double what Plaid was reportedly valued at during its last fundraising when it took a $250 million Series C spherical that was introduced in December 2018.
Started in 2013 and presently connecting with over 11,000 monetary institutions throughout the U.S., Canada, and Europe, Plaid will be able to use the acquisition to leverage Visa’s global brand in increasing its enterprise, in line with a source acquainted with the subject.
Visa expects the contract to close in the next three to six months and profit its adjusted earnings per share at the end of the third year.
Visa stated it should fund the contract utilizing cash readily available, as well as debt that will be issued at a later date.
The acquisition wouldn’t impact upon Visa’s previously introduced stock buyback or dividend plans.
Both Visa and Plaid used Lazard and Goldman Sachs as their financial consultants.