Brex co-founders Pedro Franceschi and Enrique Dubugras;
brex
capital one announced Thursday that it will acquire payments startup Brex for $5.15 billion. This is the latest splashy deal made by the bank’s CEO, Richard Fairbank.
The company, which disclosed the acquisition in its fourth-quarter income statement, said the deal was comprised of 50% cash and 50% stock. Brex was previously valued at $12.3 billion.
The bank’s stock price fell about 3%.
Under Mr. Fairbank, a rare founder and CEO of a major U.S. bank, Capital One last year acquired rival card company Discover Financial for about $35 billion. The deal was Fairbank’s crowning achievement, giving credit card lenders of all sizes access to a single payment network.
“Since our founding, we have been committed to building a payments company at the forefront of the technology revolution,” Fairbank said in a release. “The acquisition of Brex accelerates this effort, especially in the business payments market.”
Fairbank said Brex pioneered the convergence of corporate card, banking and spend management software, saying, “They took the most unusual journey for a fintech and built a vertically integrated platform from the bottom of the technology stack to the top.”
Still, Brex’s valuation has fallen more than 50% from 2023 levels, showing that even successful fintech companies face headwinds.
Brex is a type of fintech company that became famous during the low interest rate era. The company was initially known as a startup that lends money to other startups through cards.
However, the company has expanded beyond technology into other areas and now serves major corporations and startups alike. robin hood, zoom And humanity.
Capital One, which has offered corporate credit cards for decades, has become convinced that Brex’s model is the one that will survive, according to people familiar with the company’s strategy.
“There was no need to move forward with this acquisition. Our growth has been incredibly strong,” Brex CEO Pedro Franceschi said in an interview with CNBC.
Combining Brex’s technology with Capital One’s reach and resources will help the startup grow faster than a standalone company, he said.
