Deal details and market reaction
Capital One said Thursday that it will acquire payments startup Brex for $5.15 billion, marking the latest major acquisition led by chief executive Richard Fairbank.
The bank disclosed the transaction in its fourth-quarter earnings statement, saying it would fund the purchase with a mix of 50% cash and 50% stock. Brex was previously valued at $12.3 billion.
Capital One shares fell about 3% following the announcement.
Strategic rationale behind the acquisition
Fairbank, one of the few founder-led CEOs at a major U.S. bank, said the deal aligns with Capital One’s long-term ambition to build a technology-driven payments platform.
“Acquiring Brex accelerates this journey, especially in the business payments marketplace,” Fairbank said, highlighting Brex’s integrated approach to corporate cards, banking and spend management software.
He added that Brex successfully built a vertically integrated platform spanning the full technology stack, a rare achievement in the fintech sector.
Brex’s evolution and valuation reset
The acquisition reflects the challenges faced by fintech companies as higher interest rates reshape the industry. Brex’s valuation has fallen by more than 50% since its 2023 peak.
Initially known for offering credit cards and lending solutions to startups, Brex has since expanded its client base to include larger, more established companies across multiple industries.
Growth ambitions and combined scale
Capital One, which has offered business credit cards for decades, determined that Brex’s operating model could represent the future of business payments, according to a source familiar with the strategy.
Brex CEO Pedro Franceschi said the company did not need to pursue a sale, noting that growth remained strong. However, he said combining Brex’s technology with Capital One’s scale and resources would allow the platform to expand more rapidly than it could independently.
