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Illustration: Aïda Amer/Axios

Visa will no longer be buying fintech upstart Plaid, as the companies on Tuesday announced the "mutual termination" of the $5.3 billion agreement that was signed one year ago and opposed by U.S. antitrust regulators.

Why it matters: This is more about the rising value of fintech companies than it is about the U.S. Justice Department. It also turns Plaid into a very appealing target for growth equity investors, IPO bankers and SPAC sponsors.

Backstory: DOJ sued to block the deal in November, claiming it would eliminate Plaid's future ability to compete in the online debit market, thus giving Visa a monopoly. Visa said it would vigorously defend itself, in part because Plaid has no online debit products nor any in the pipeline.

  • Visa also sought an expedited process to begin in the spring, whereas DOJ sought a December trial. The two sides met just before the holidays, but I'm told that DOJ would only agree to split the difference.

What officially happened next: Visa and Plaid mutually agreed to scrap the deal, with no termination fees to be paid.

What really happened next: Plaid got cold feet, per multiple sources familiar with the situation. Not because of any malfeasance by Visa, but because it knew it was now worth way more than $5.3 billion. And the DOJ suit, and corresponding closing delays, gave it an escape hatch.

Between the lines: Just look at today's fintech deal news — Affirm goes public at $49 per share, after selling stock at around $20 per share last September. Blend raises at $3.3 billion, doubling its valuation in just five months. Rapyd raised at $2.5 billion, versus $1.2 billion in Dec. 2019. MX raised at a $1.9 billion valuation, quadrupling where it was in mid-2019.

  • “It was a stale price,” says a source close to the deal, adding that Visa not paying a termination fee is evidence of who walked away from the table first. Another source adds that Plaid had “buyer’s remorse.”
  • Plaid couldn't even benefit from the mild increase in Visa's stock price, as almost all the deal was to be paid in cash.

Company CEO Zach Perret declined to discuss the tick-tock with me, as did a Visa spokesman, but says he and Plaid’s board “met a couple of weeks ago and made the decision to part ways.”

  • He added that Visa remains an investor and that the two companies may still partner together in the future.
  • When I asked if the company would now get into the online debit business, Perret gave a noncommittal laugh.

What comes next: It’s not yet clear. Plaid is said to have a decent cash position, but also has lots of vested employees who were banking on liquidity. So don’t be surprised to see some sort of secondary offering, or maybe even a SPAC (as it’s a faster route than IPO, which Plaid wouldn’t have been gearing up for).

Go deeper

Felix Salmon, author of Capital
Jan 14, 2021 - Economy & Business

The complex new landscape of going public

Illustration: Aïda Amer/Axios

The question is no longer whether a company should go public; it's how.

Why it matters: The much-resented traditional IPO, run by Wall Street and largely for Wall Street, now has competition. A lot of it.

22 mins ago - Politics & Policy

Biden's latest executive order: Buy American

President Joe R. Biden speaks about the economy before signing executive orders in the State Dining Room at the White House on Friday, Jan 22, 2021 in Washington, DC. (Photo by Jabin Botsford/The Washington Post via Getty Images)

President Joe Biden will continue his flurry of executive orders on Monday, signing a new directive to require the federal government to “buy American” for products and services.

Why it matters: The executive action is yet another attempt by Biden to accomplish goals administratively without waiting for the backing of Congress. The new order echoes Biden's $400 billion campaign pledge to increase government purchases of American goods.

Tech digs in for long domestic terror fight

Illustration: Sarah Grillo/Axios

With domestic extremist networks scrambling to regroup online, experts fear the next attack could come from a radicalized individual — much harder than coordinated mass events for law enforcement and platforms to detect or deter.

The big picture: Companies like Facebook and Twitter stepped up enforcement and their conversations with law enforcement ahead of Inauguration Day. But they'll be tested as the threat rises that impatient lone-wolf attackers will lash out.