Visa not to close acquisition of Plaid until tenth day after entry of Court judgment
The United States Department of Justice (DOJ) and Visa Inc have agreed on certain deadlines regarding discovery. In a proposed discovery order, filed with the California Northern District Court on January 5, 2021, the parties in the antitrust case targeting Visa’s planned $5.3 billion acquisition of Plaid, outline discovery terms and deadlines.
The document also includes a brief note regarding completion of the planned transaction. Visa Inc and Plaid have agreed that they will not close, consummate, or otherwise complete the Planned Transaction until 12:01 a.m. on the tenth day following the entry of the judgment by the Court, and only if the Court enters an appealable order that does not prohibit consummation of the transaction.
Let’s note that the trial in this case is set to begin on June 28, 2021. Hence, even if the Court sides with Visa Inc on the matter, it will not be able to complete the acquisition before the second half of 2021.
The DOJ’s complaint alleges that Visa’s CEO viewed the acquisition as an “insurance policy” to protect against a “threat to our important US debit business.” This acquisition is the second-largest in Visa’s history, with an extraordinary price tag of $5.3 billion. Visa’s CEO justified the deal to Visa’s Board of Directors as a “strategic, not financial” move, and noted that in part because “our US debit business is critical and we must always do what it takes to protect this business.”
Unless acquired, Visa feared that Plaid “on their own or owned by a competitor was going to create some threat” with a “potential downside risk of $300-500M in our US debit business” by 2024. If Plaid remained free to develop its competing payment platform, then “Visa may be forced to accept lower margins or not have a competitive offering.”
According to the complaint, Visa has dominated online debit for years and has protected its monopoly with exclusionary tactics that have prevented rivals, including Mastercard, from expanding or entering. The lawsuit alleges that Visa’s proposed acquisition of Plaid is a violation of both Section 2 of the Sherman Act and Section 7 of the Clayton Act.