Capital One to acquire Discover, bolstering credit card market power

Capitol One announced Monday that it will acquire Discover Financial Services in an all-stock deal that is expected to strengthen the bank’s position in the credit card market.

Discover shareholders will receive just over 1 Capitol One share (1.0192) for every Discover share they own, which is about a 27% premium based on Discover’s closing price last Friday. One. stated in a statement Monday night.

If the deal goes through, Capitol One shareholders will own about 60% of the combined company, and Discover shareholders will own about 40%, according to the statement.

“Our acquisition of Discover brings together two highly successful companies with complementary capabilities and franchises, and brings together one of the largest “This is a unique opportunity to build a payment network that can compete with traditional payment networks and payment companies.” said in a statement.

“As technology continues to transform the payments and banking markets, this combination creates a company that is extremely well-positioned to create significant value for consumers, small businesses, merchants and shareholders.” added.

Discover CEO and President Michael Rose said the partnership brings together “two strong brands” and expands opportunities for shareholders and customers.

The transaction is expected to close in late 2024 or early 2025 and is subject to regulatory approval and approval by shareholders of both companies.

Discover is one of the smaller credit card companies compared to Visa, Mastercard, and American Express. market evaluation Approximately $27.72 billion.

Capital One issues most cards for Visa and Mastercard, as well as a small number for Discover. The deal will likely result in at least some cards being switched through the Discover network, The Wall Street Journal reported. Reported early Monday.

The deal also gives Capitol One a new revenue stream from newly collected merchant fees. CNN Business reported.