Capital One Financial will buy credit card lender Discover Financial Services in a $35 billion all-stock deal to create the largest U.S. credit card company by loan volume.
Capital One, based in McLean, Virginia, will pay 1.0192 of its own shares for each Discover share, a premium of 26.6% over the Feb. 16 closing price, the company said in a statement. The transaction is expected to be finalized in late 2024 or early 2025.
The deal brings together two well-known consumer credit brands, a combination that will overtake longtime rivals JPMorgan Chase & Co. and Citigroup Inc. in U.S. credit card loan volume, according to compiled data by Bloomberg Intelligence.
Capital One holders will own approximately 60% of the combined company and Discover holders will own approximately 40%, according to the release. The acquisition will generate pre-tax synergies of $2.7 billion.
The Discover purchase is the world’s largest acquisition this year, according to data compiled by Bloomberg. The biggest deal so far has been Synopsys Inc.’s acquisition of software developer Ansys Inc. for about $34 billion, announced in January.
In recent years, Capital One has tried to attract more premium customers, who are generally higher spenders and more loyal. It agreed to buy digital concierge service Velocity Black last year, moving deeper into luxury markets dominated by American Express Co. and JPMorgan.
Discover has long focused on blue-chip customers with better credit scores, although it has historically eschewed the flashy sign-on bonuses and lavish perks used by many of its competitors.
