Capital One to buy Discover - What the $35 billion deal means for credit card industry
Capital One Financial is acquiring Discover Financial Services in a $35 billion all-stock deal.
TheStreet's J.D. Durkin brings the latest business headlines from the floor of the New York Stock Exchange as markets open for trading Tuesday, February 20.
Full Video Transcript Below:
J.D. DURKIN: I'm J.D. Durkin - reporting from the New York Stock Exchange. Here’s what we’re watching on TheStreet today.
Stocks are kicking off a shortened trading week as investors react to better-than-expected earnings from both Walmart and Home Depot. Both retailers remained resilient in the fourth quarter despite persistent inflation.
Markets are looking ahead to minutes from the Federal Reserve’s meeting Wednesday, jobless claims Thursday, and earnings from big names like Warner Brothers, Etsy, NVIDIA, and Wayfair.
In other news - Capital One is acquiring Discover Financial Services. The deal, which is set to close in late 2024 or early 2025, is an all-stock transaction worth more than $35 billion. The acquisition will give Capital One a market value of just over $52 billion.
If the deal is completed, Capital One shareholders will own 60 percent of the combined company, with Discover shareholders owning the remaining 40 percent. Shareholders of Discover will receive just over one share of Capital One for every share they own.
Unlike Visa and Mastercard, Discover has its own card networks, meaning the company itself helps broker the fees paid between merchants and consumers. Discover also processes payments itself, while many credit card issuers do not. Capital One CEO Richard Fairbank said the deal would "build a payments network that can compete with the largest payments networks and payments companies."
The deal would rank among the biggest mergers and acquisitions in 2024 thus far. And as economic uncertainty caused a dip in M&A activity in 2023, deals in the United States are up 90 percent compared to this time last year.
That’ll do it for your daily briefing. From the floor of the New York Stock Exchange, I’m J.D. Durkin with TheStreet.
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