Capital One to acquire Discover Financial for $35 bln
Investing.com — Capital One Financial (NYSE:COF) has said it will acquire credit card company Discover Financial Services (NYSE:DFS) in an all-stock, $35 billion deal, marking one of this year's largest deals and Capital One's largest deal in its history.
Shares in Capital One dipped in premarket U.S. trading on Tuesday, while Discover shares surged by more than 11%.
Capital One will give Discovery shareholders 1.0192 shares for each share in Discover, representing a per-share value of $139.86, based on Capital One's Friday close. The deal represents a premium of about 26.6% to Discover's Friday closing price, and values the credit card firm at $34.97 billion.
Capital One said in a press release that it had entered a definitive agreement with Discover for the deal, confirming recent reports that the two were considering a merger. The news comes with the U.S. stock market closed Monday for President's Day.
The move is projected to generate $2.7 billion in pre-tax synergies and be more than 15% accretive to Capital One's non-GAAP EPS by 2027.
«The deal is expected to be accretive to earnings over time [...], but near-to-medium term is less certain given lack of color [regarding] pace of cost saves, purchase accounting dynamics, and credit assumptions,» analysts at Evercore ISI said in a note to clients.
After the closing of the deal, Capital One shareholders will hold 60% and Discovery shareholders will own about 40% of the combined entity.
«Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,» Capital One founder,
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