Credit Karma To Divest Tax Unit To Square In $7.1B Merger With Intuit

Credit Karma app

The Department of Justice is requiring Credit Karma to divest its tax business to Square as part of Intuit’s $7.1 billion proposed takeover of Credit Karma.

On Wednesday (Nov. 25), Intuit and Credit Karma said they had received clearance from the Department of Justice (DOJ) for the merger, and had agreed for Credit Karma to sell its tax business to Square. The sale to Square is contingent on the closing of the Intuit and Credit Karma merger.

According to CNBC, the DOJ’s proposal is intended to create a new competitor in the space to mitigate any antitrust concerns about the merger between Credit Karma and Intuit.

Square will buy Credit Karma Tax for $50 million in cash, which will allow the Cash App to offer tax filing services to its app users.

“We created Cash App to provide more access to the masses of people left out of the financial system and are constantly looking for ways to redefine our customers’ relationship with money by making it more relatable, instantly available, and universally accessible,” said Brian Grassadonia, Cash App Lead, in a press release. “With this acquisition, we believe Cash App will be able to ease customers’ burden of preparing taxes every year.”

Credit Karma’s tax unit has about 2 million customers, while Intuit’s Turbo Tax division has around 42.7 million in the United States. Credit Karma has approximately 110 million customers in total, CNBC said.

In addition to Turbo Tax, Intuit also operates QuickBooks and Mint.  Intuit has around 57 million customers, the company said.

“We are very excited to reach this important milestone today. This brings us one step closer to transforming personal finance by making it simpler for consumers to find the right financial products, put more money in their pockets, and provide financial expertise and advice,” said Sasan Goodarzi, CEO of Intuit, in a statement.

“We are pleased to have cleared this necessary regulatory review with DOJ and appreciate their careful consideration of this transaction. Consumers will continue to benefit from the Credit Karma Tax product as part of Square,” she added.