US Capital One to Acquire Discover for $35 Billion... Largest M&A This Year

U.S. financial firm Capital One is acquiring Discover Financial, owner of the credit card brand 'Diners Club,' for approximately $35 billion (about 46.87 trillion KRW). This is the largest merger and acquisition (M&A) deal so far this year.

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According to Bloomberg and other sources on the 19th (local time), the acquisition will be conducted entirely through a stock transaction. Discover shareholders will receive 1.0192 shares of Capital One stock for each Discover share they hold. This represents a premium of about 26.6% compared to Discover's closing price on the 16th. The acquisition process is expected to be completed by the end of 2024 or early 2025.

This is the largest M&A announced this year. It exceeds by $1 billion the $34 billion acquisition of software developer Ansys by U.S. chip design company Synopsys last month. The report stated, "This is the largest M&A so far this year," adding that "as major U.S. consumer finance brands combine, they will surpass JPMorgan Chase and Citigroup in terms of credit card loan standards." As of last week, the market capitalizations of Discover and Capital One were approximately $27.6 billion and $52.2 billion, respectively.

Capital One, the ninth-largest bank and credit card issuer in the U.S., is expected to expand its credit card and deposit base through this acquisition. The company estimates that the deal will generate $2.7 billion in synergies. In addition to the Visa and Mastercard networks currently used, Capital One is reported to switch some transactions to the Discover network. The company also acquired the digital concierge firm Velocity Black in June last year.

Local media also noted that this acquisition was pursued following last year's regulatory investigations and management changes surrounding Discover. Discover's profit in the fourth quarter of last year fell by 62%.

This content was produced with the assistance of AI translation services.