Capital One buys startup Brex for $5.15 billion in firm’s latest deal
Capital One Acquires Payments Startup Brex for $5.15 Billion
Brex co-founders Pedro Franceschi and Henrique Dubugras.
Capital One announced on Thursday that it was purchasing payments startup Brex for $5.15 billion, marking another significant acquisition by CEO Richard Fairbank. The deal, revealed in Capital One’s fourth-quarter earnings report, consists of 50% cash and 50% stock, with Brex previously valued at $12.3 billion.
The news of the acquisition caused Capital One’s shares to drop by approximately 3%. This move follows Fairbank’s successful acquisition of rival card firm Discover Financial for around $35 billion last year, solidifying Capital One’s presence in the payment network industry.
In a statement, Fairbank expressed his excitement about the acquisition, stating, “Since our founding, we set out to build a payments company at the frontier of the technology revolution. Acquiring Brex accelerates this journey, especially in the business payments marketplace.”
He praised Brex for its innovative approach to combining corporate cards, banking services, and spend management software, calling it a “vertically integrated platform from the bottom of the tech stack to the top.”
Despite Brex’s success, the significant drop in valuation from its peak in 2023 highlights the challenges faced by even thriving fintech companies. Originally known for providing loans to startups through its cards, Brex has expanded its services to cater to larger established firms and startups like Robinhood, Zoom, and Anthropic.
Capital One’s decision to acquire Brex reflects its belief that Brex’s model is the future of business credit cards. Brex CEO Pedro Franceschi acknowledged that the company’s growth was strong enough to stand alone, but combining forces with Capital One would accelerate its growth trajectory.
By leveraging Brex’s technology and Capital One’s resources, the combined entity aims to enhance its scale and offerings in the competitive business payments market.
