Capital One acquires Discover Financial Services in $35bn deal
US financial services giant Capital One is set to acquire Discover Financial Services in an all-stock transaction valued at $35.3 billion.
Capital One to buy Discover in £35bn deal
The Virginia-based firm, which claims to hold $348.4 billion in deposits and $478.5 billion in total assets, says the procurement of Discover “is a key foundation” in its “quest to build a global payments company”.
Founded in 1986, Discover Financial Services is a digital banking and payment services company and one of the largest card issuers in the US.
“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,” explains Capital One’s founder, chairman and CEO, Richard Fairbank.
The company plans to leverage Discover’s customer base, technology, and data ecosystem to “deliver enhanced value to a franchise of over 100 million customers” and help boost merchant sales.
Capital One expects the transaction, which is planned to close in late 2024 or early 2025 and is subject to regulatory and shareholder approvals, to deliver a return on invested capital of 16% in 2027, with an internal rate of return of over 20%.
Upon the completion of the deal, three Discover board members will also join Capital One’s board of directors, with the individuals to be named at a later date.
