Capital One to Acquire Discover in $35.3 Billion Deal
Capital One announced Monday that it would acquire Discover Financial Services in an all-stock transaction valued at $35.3 billion, a deal that would merge two of the largest credit card companies in the United States.
«A space that is already dominated by a relatively small number of megaplayers is about to get a little smaller,» said Matt Schulz, chief credit analyst at LendingTree.
Capital One, with $479 billion in assets, is one of the nation's largest banks, and it issues credit cards on networks run by Visa and Mastercard. Acquiring Discover will give it access to a credit card network of 305 million cardholders, adding to its base of more than 100 million customers. The country's four major networks are American Express, Mastercard, Visa and Discover, which has far fewer cardholders than its competitors.
As part of the acquisition, Capital One will pay Discover shareholders a 26% premium based on the company's closing stock price Friday. At the close of the deal, which is subject to regulatory approval and is expected in late 2024 or early 2025, Capital One shareholders will own approximately 60% of the combined company and Discover shareholders will own the rest.
Discover was valued at about $28 billion when the market closed Friday, and Capital One was valued at about $52 billion.
The deal is part of Capital One's strategy to build a global payments network, helping it work directly with merchants and small businesses. And it gives Discover greater scale to compete with other credit card companies.
