Sundiata Post – United States banking giant Capital One has announced it will acquire financial services company Discover in a $35.3 billion all-stock deal combining two of America’s major credit card firms.
Capital One made this known in a statement on Monday, February 19, 2024.
Under the deal, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, a premium of 26.6 per cent over Discover’s closing price on Friday.
Capital One founder and CEO, Richard Fairbank, said the acquisition of Discover will help “build a payments network that can compete with the largest payments networks and payments companies”.
Once the deal goes through, Capital One shareholders will own approximately 60 per cent of the combined company, and Discover shareholders will own approximately 40 per cent.
Discover is among the United States’ major credit card networks but is smaller than the top three – Visa, Mastercard, and American Express.
The company’s acquisition will “accelerate growth and maximize value for our shareholders, enabling them to participate in the tremendous upside of the combined company,” AFP quoted Discover CEO, Michael Rhodes, as saying.
According to Capital One, if approved, the deal is expected to close in late 2024 or early 2025.
“The combined credit card business will be in an even stronger position to deliver industry-leading products and experiences that span the credit card marketplace across consumers, small businesses, and merchants,” Capital One said in its statement.
The companies will host a conference call at 8:00 am (1300 GMT) on Tuesday.
