Capital One Financial Corporation said it has signed a definitive agreement to purchase the Discover credit card brand in an all-stock transaction valued at $35.3 billion.
With the deal, the two of the largest credit card companies in the country have consolidated.
"The transaction brings together two companies with long-standing track records of delivering attractive and resilient financial results, award-winning customer experiences, breakthrough innovation, and financial inclusion," Capital One said in a statement published on its official website.
The corporation explained, "Under the terms of the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a premium of 26.6% based on Discover's closing price of $110.49 on February 16, 2024. At close, Capital One shareholders will own approximately 60% and Discover shareholders will own approximately 40% of the combined company."
Capital One highlighted that Discover has created a rare and valuable global payments network with 70 million merchant acceptance points in more than 200 countries. It detailed that, despite this, it is the smallest of the four global payment networks based in the United States. Therefore, the corporation insisted, this negotiation allows the Discover network to be more competitive with larger payment networks and companies.
This is a key foundation in Capital One's quest to build a global payments company. It will accelerate the company's long path to working directly with merchants to leverage their customer base, technology and data ecosystem to generate more sales for merchants and great deals for consumers and small businesses.
The deal comes at a time when the credit card sector is booming because more and more consumers are switching from paying in cash to paying by card due to the digitalization that was promoted during the pandemic.
‘A payments and banking company powered by modern technology’
Richard Fairbank, founder, president and CEO of Capital One, celebrated the agreement and maintained that it is an achievement that strengthens the vision of the corporation:
"From Capital One's founding days, we set out to build a payments and banking company powered by modern technology. 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."
