The proposed acquisition would create the largest credit card company in the United States.
Banking giant Capital One announced plans to acquire Discover Financial Services for $35.3 billion in a deal that would combine two of the nation's largest lenders and credit card issuers.
Capital One founder and CEO Richard Fairbank called the transaction “a great opportunity to bring together two great companies.”
“This deal builds on our long-standing commitment to working directly with merchants and leveraging our customer base, technology and data to increase sales for merchants and drive great deals for consumers and small businesses,” Fairbank said in a statement. It accelerates efforts across the country,” he said in a video statement published in the paper. It was posted on the company's website on Monday.
Discover CEO Michael Rose said the acquisition “brings together two strong brands with an enhanced ability to accelerate growth” and “maximizes value for our shareholders.” said.
“We look forward to a bright future as part of the Capital One family and look forward to providing additional opportunities to our loyal customers,” Rose said in a statement.
Capital One, the 12th largest bank in the United States with more than $470 billion in assets, will become the largest credit card company in the United States by loan value with the acquisition.
Discover is the smallest of the four major U.S.-based credit card companies and boasts a network of approximately 305 million cardholders, nearly triple Capital One's existing customer base. I am.
Credit cards are a lucrative business for U.S. issuers, and Americans' card balances rose to a record $1.13 trillion in the fourth quarter of 2023, according to the New York Fed.
Under the proposed takeover, Discover shareholders would receive just over one Capital One share for every Discover share they own, which would represent a roughly 27% premium compared to Discover's closing price on Friday. .
Capital One shareholders, including Warren Buffett's Berkshire Hathaway, will own 60% of the combined company, with Discover shareholders owning the remainder.
The announcement of the partnership prompted a backlash from consumer rights groups.
Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said the deal is likely to raise concerns among regulators, including the Federal Trade Commission and the Consumer Financial Protection Bureau.
“Maybe retailers would object too?” I can't think of anything. [a] “Bank mergers face greater opposition than Capital One's acquisition of Discover,” Van Tol said in a post on X.
The administration of US President Joe Biden has made strengthening antitrust enforcement a central part of its economic policy, declaring that “capitalism without competition is not capitalism.''
Last year, the U.S. Justice Department's antitrust division announced plans to strengthen its review process for bank mergers in light of advances in technology in the financial services industry.
