Capital One has announced its acquisition of Discover Financial Services in a significant all-stock transaction valued at $35.3 billion, marking a substantial development in the financial industry.

Under the terms of the deal, Capital One shareholders will hold a 60% stake in the combined entity, while Discover shareholders will possess the remaining 40%. Capital One’s chairman and CEO, Richard Fairbank, emphasized the strategic importance of this acquisition, noting the opportunity to merge two successful companies with complementary capabilities and franchises.

The acquisition aims to enhance the competitive position of the combined company in the payments sector, with plans to build a robust payments network capable of competing with industry giants like Visa, Mastercard, and American Express. Discover’s expansive payments network, spanning 70 million merchant acceptance points across over 200 countries and territories, offers significant potential for growth and expansion.

Capital One’s acquisition will provide additional scale and investment, enabling Discover’s network to better compete with industry leaders. The transaction is slated to close in late 2024 or early 2025, subject to customary closing conditions and regulatory approvals.

Upon completion of the deal, three Discover board members will join the Capital One board of directors, further integrating the two entities.

Both Capital One and Discover express optimism about the future prospects of the combined company, anticipating expanded opportunities for customers and continued growth and success in the financial services industry.

Source: Adapted from USA Today report “Capital One is acquiring Discover: What to know about the $35 billion, all-stock deal“.