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Capital One has announced plans to purchase Discover Financial Services in an all-stock deal valued at $35.3 billion, aiming to enhance its position in the credit card sector.

Under the terms of the agreement, Discover shareholders will receive approximately 1.0192 Capital One shares for each Discover share they hold, translating to a nearly 27% premium based on Discover’s last closing price. This move is set to reshape ownership, with Capital One shareholders poised to control around 60% and Discover shareholders about 40% of the merged entity.

Capital One Discover Split

Richard Fairbank, the founder, chairman, and CEO of Capital One, emphasized the merger’s potential to unite the two entities with each other’s strengths, envisioning a competitive edge in the payments and banking industries. He said, “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.”

Echoing this sentiment, Michael Rhodes, CEO and president of Discover, commented on the merger’s promise to combine “two strong brands,” offering enhanced opportunities for both shareholders and customers. The transaction is anticipated to be finalized between late 2024 and early 2025 and hinges on receiving the green light from regulatory bodies and the approval of both companies’ shareholders.

Discover, known for its smaller presence in the credit card market compared to giants like Visa, Mastercard, and American Express, has a market valuation of about $27.72 billion. The acquisition by Capital One, which predominantly issues Visa and Mastercard alongside a limited number of Discover cards, is expected to initiate a transition of some cards to the Discover network.


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