Capital One Financial is set to acquire Discover Financial Services in an all-stock deal valued at $35.3 billion, the two companies announced on Monday.
The deal — first reported by the The Wall Street Journal — would merge two of the largest credit-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," Richard Fairbank, Capital One's founder, chairman and CEO said in the statement.
Under the deal, Discover shareholders will receive 1.0192 Capital One share for each Discover share. This represents a 26.6% premium over Discover's closing price of $110.49 on Friday.
The deal is expected to close in late 2024 or early 2025.
Warren Buffett-backed Capital One, a bank that issues credit cards, serves more than 100 million customers, according to its website.
Meanwhile, Discover is coming off of a difficult year in which compliance lapses found in an internal review led to the resignation of its CEO. The credit card company reported a 62% drop in Q4 profits and currently carries a market value of around $27.63 billion, with shares down nearly 2% for the year.
An acquisition of this size could signal a better year ahead for a long-anticipated rebound in mergers and acquisitions. Global M&A fell to a 10-year low last year, marking a drag on the investment banks that make money helping boards and investors buy and sell companies.
Capital One's shares closed 0.6% higher at $137.23 apiece on Friday. They are up nearly 5% in 2024, reaching a market cap of $52.2 billion.
February 19, 9:23 p.m. ET: This story has been updated with details of the deal.
