MCLEAN, Va. and RIVERWOODS, Ill.—Capital One announced on February 19, an agreement to acquire Discover Financial Services, a leader in credit cards and global payments, in an all-stock transaction valued at $35.3 billion.
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.
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.
“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,” said Richard Fairbank, founder, Chairman and Chief Executive Officer of Capital One. “Through this combination, we’re creating a company that is exceptionally well-positioned to create significant value for consumers, small businesses, merchants, and shareholders as technology continues to transform the payments and banking marketplace.”
“The transaction with Capital One brings together two strong brands with enhanced ability to accelerate growth and maximizes value for our shareholders, enabling them to participate in the tremendous upside of the combined company,” said Michael Rhodes, CEO and President of Discover. “This agreement underscores the strength of our business and is a testament to the hard work of Discover employees. We look forward to a bright future as part of the Capital One family and to providing expanded opportunities for our loyal customers.”
Other key elements to the acquisition are:
- Creates a global payments platform at scale, with 70 million merchant acceptance points in more than 200 countries and territories
- Positions the combined company to compete with the largest payments companies and deliver enhanced value to a franchise of over 100 million customers
- Enables Capital One to leverage its customer base, technology, and data ecosystem to drive more sales for merchants and great deals for consumers and small businesses
- Leverages Capital One’s eleven-year technology transformation across a much larger enterprise
- Generates $2.7 billion in pre-tax synergies and >15% accretive to adjusted non-GAAP EPS in 2027
- Delivers return on invested capital (ROIC) of 16% in 2027 with internal rate of return (IRR) >20%
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SOURCE: Capital One
