Capital One has unveiled plans to acquire U.S. credit card issuer Discover Financial Services in a landmark all-stock transaction valued at $35.3 billion. The deal, set to be the sixth-largest U.S. bank by assets, aims to create a credit card giant, positioning itself against industry competitors such as JPMorgan Chase and Citigroup. The transaction is expected to face intense antitrust scrutiny and would see Discover shareholders receiving 1.0192 Capital One share for each Discover share, constituting a 26.6% premium over Discover’s closing price on Friday.
If finalized, Capital One shareholders would own 60% of the combined company, with Discover shareholders holding the remaining stake. The companies anticipate achieving $2.7 billion in pre-tax synergies in 2027, encompassing cost-cutting and network savings. The deal is projected to receive regulatory approval in late 2024 or early 2025, but its announcement aligns with the Biden administration’s focus on promoting competition across various sectors, sparking expectations of heightened regulatory scrutiny.