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February 24, 2020

Intuit to buy Credit Karma for $7bn

By Mohamed Dabo

Intuit is nearing a deal to buy personal-finance portal Credit Karma for about $7bn in cash and stock–it would be financial software company’s biggest deal ever.

The mega deal, Intuit’s largest acquisition by far in its 37-year history, would push intuit further into consumer finance. Assuming talks don’t fall apart, the agreement could be announced as early as today.

Intuit, the bookkeeping-software giant, would buy the privately held Credit Karma, which was valued at roughly $4bn in a private share sale about two years ago.

The deal would be the first sizable transaction under Chief Executive Sasan Goodarzi, who took over a little more than a year ago.

Under the deal being discussed, Credit Karma would operate as a stand-alone unit. Current CEO Kenneth Lin would remain in charge.

Deal would help improve capabilities

Joining forces could allow both Credit Karma and Intuit to fine-tune their recommendations to customers. They will be able to expand the trove of financial data they use to make suggestions.

The move would cap a rapid rise for Credit Karma, which is backed by funders including private-equity firm Silver Lake and financial-technology venture firm Ribbit Capital.

Based in San Francisco and founded in 2007 by Mr. Lin, Nichole Mustard and Ryan Graciano, Credit Karma at one point was eyeing an initial public offering no earlier than late 2019.

But the IPO market has looked more dubious after the disappointing debuts of some startups including Uber Technologies Inc. The merger market, especially for financial technology companies, has remained strong.

Such deals have accounted for several of the largest transactions announced so far this year, including Morgan Stanley’s $13 billion purchase of E*Trade Financial Corp., announced this past week, and Visa Inc.’s $5.3 billion acquisition of startup Plaid Inc. announced last month.

Expanded financial offerings

Credit Karma offers its customers free access to their credit scores and borrowing history, alerts to possible data breaches, credit monitoring and tax preparation and filing.

Customers in turn receive offers from other companies for credit cards and loans tailored to their credit history, and Credit Karma makes money when customers use those products.

Adding the buzzy startup to its stable would give Intuit a stronger foothold in the burgeoning realm of online personal finance.

In addition to TurboTax, the online software that millions of people use to file their taxes, Intuit’s offerings include QuickBooks bookkeeping software used by businesses and Mint, an online-budgeting platform that also pitches individual financial products. Intuit has a market value of roughly $77 billion.

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