Discover to be purchased by Capital One for $35 billion

A $35 billion deal from Capital One to purchase Discover Financial Services would drastically change the payment card market.

By uniting two of the top credit card issuers in the US, the all-stock deal paves the way for the development of a payments network that can challenge the Mastercard/Visa duopoly globally.

Capital One shares, valued at around $140 a share, will be distributed to Discover Financial shareholders, representing a significant premium over recent closing prices.
Serving 100 million clients, the combined franchise has 70 million merchant acceptance points spread throughout more than 200 countries and territories.

The combination of the two businesses’ sizable client bases and Discover’s payment processing network provide a chance to challenge the supremacy of current networks. Additionally, it provides Discover’s payment network with a significant credit card partner in a manner that may resurrect the network as a significant rival.
Richard Fairbank, the founder, chairman, and CEO of Capital One, states, “Our acquisition of Discover is a unique 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.” As technology continues to change the payments and banking industry, “with this combination, we’re creating a company that is exceptionally well-positioned to create significant value for consumers, small businesses, merchants, and shareholders.”

In addition to $1.2 billion in network synergies from the addition of Capital One debit purchase volume and specific credit card purchase volume to the Discover network, the transaction is anticipated to result in expense savings of $1.5 billion in 2027 (26% of Discover operating expenses and 10% of Discover marketing expenses). These savings will be partially offset by targeted investments in the Discover network.


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[Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. advises its readers and viewers to consult their financial advisors before taking any money-related decisions.]

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