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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.

13 mins ago - Health

England lifts quarantine requirement for vaccinated EU, U.S. citizens

U.K. Prime Minister Boris Johnson and President Biden at the G7 in Cornwall last month. Photo: Leon Neal - WPA Pool/Getty Images

Fully vaccinated travelers from the European Union and the U.S. will no longer need to quarantine when arriving in England, effective Aug. 2 at 4 a.m. local time, the U.K. government announced Wednesday.

Why it matters: It's a reflection of the British government's confidence in its highly successful COVID-19 vaccine rollout, despite the spread of the Delta variant. The move stands in stark contrast to the Biden administration's continued refusal to lift restrictions for travelers from the U.K. and Europe.

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Simone Biles is still a winner

Photo: Laurence Griffiths/Getty Images

Simone Biles' leadership on the mat has never been questioned. After her shocking withdrawal from Tuesday's team final, she proved just as capable a leader off of it.

What happened: During the first rotation, Biles performed an uncharacteristically bad vault, appearing to lose herself in midair.