Important points
- Capital One reportedly plans to acquire Discover Financial in a deal that will partner two major credit card providers.
- The deal is expected to value Discover's current market capitalization of $27.6 billion and could be announced as early as Tuesday. wall street journal report.
- Discover recently raised its provisions for bad debts and is also facing regulatory scrutiny over compliance and risk management issues.
Capital One Financial Corp. (COF) reportedly plans to acquire Discover Financial Services (DFS) in a deal that will partner two of the largest U.S. credit card companies.
A deal could be announced as early as Tuesday. wall street journal It was reported on Monday. bloomberg news Capital One reported earlier in the day that it was in ongoing discussions with advisers to evaluate a potential deal with Discover.
The report from journal He said the deal is expected to value Discover above its current market capitalization, which was $27.6 billion as of Friday's close. Capital One's market capitalization was $52.2 billion. Financial markets in the United States were closed on Monday for the President's Day holiday.
Discover last month reported lower-than-expected quarterly profits and warned of the tough conditions facing consumers, which prompted lenders to increase provisions for credit losses. Discover shares plunged on the earnings report, but have recovered most of their losses over the past month.
Discover announced in August that Roger Hochschild would step down as CEO after the company disclosed misclassified credit card accounts the previous month. . The company also faced a separate investigation by the Federal Deposit Insurance Corporation, which was resolved in October when Discover reached a consent agreement with the FDIC to improve compliance and risk management.
