Benzinga - by Michael Cohen, Benzinga Editor.
Capital One Financial Corp (NYSE: COF) has announced its plans to purchase Discover Financial Services (NYSE: DFS), marking a pivotal $35.3 billion all-stock transaction.
This strategic acquisition is poised to reshape the landscape of credit card services in the United States, bringing together two of the industry's heavyweights, according to CNBC.
As per the terms of the deal, Discover shareholders are slated to receive 1.0192 shares of Capital One for every share they hold, translating to a 26% premium over Discover's last closing price.
The completion of this merger is anticipated towards the end of 2024 or the beginning of 2025, post which Capital One and Discover shareholders will own 60% and 40% of the merged entity, respectively.
According to The Wall Street Journal, Capital One intends to retain the Discover brand, despite its existing partnerships with Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA) networks.
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This merger is expected to significantly bolster Capital One's credit card portfolio and enhance its deposit base, further solidified by its acquisition of the premium credit card and luxury market platform, Velocity Black, in the previous year.
The integration of Discover, known for its substantial deposit-gathering capabilities and extensive network, is seen as a strategic move to strengthen Capital One's market position amid the current economic climate.
CNBC reports that industry experts view this acquisition as a unique and potentially trend-setting move within the financial sector, given the limited precedents of similar-scale mergers.
The merger not only signifies a substantial expansion for Capital One but also highlights the evolving dynamics and competitive pressures within the banking and financial services industry.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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