Capital One buys Discover for $35 bn to create largest US credit card firm by loan volume

Capital One Financial will buy credit-card lender Discover Financial Services in a $35 billion all-stock deal to create the largest US credit card company by loan volume.  

McLean, Virginia-based Capital One will pay 1.0192 of its own shares for each Discover share, a 26.6% premium to the closing price on Feb. 16, the firm said in a statement. The transaction is expected to close in late 2024 or early 2025.

The deal brings together two storied consumer-finance brands, a combination that will surpass longtime rivals JPMorgan Chase & Co. and Citigroup Inc. by US credit-card loan volume, according to data compiled by Bloomberg Intelligence. 

Capital One holders will own about 60% of the combined company and Discover holders will own about 40%, according to the statement. The acquisition will generate pre-tax synergies of $2.7 billion. 

The purchase of Discover ranks as the biggest acquisition globally this year, Bloomberg-compiled data show. The top deal so far has been Synopsys Inc.’s roughly $34 billion acquisition of software developer Ansys Inc. announced in January.

In recent years, Capital One has been trying to attract more premium customers that tend to be heavy-spending and more loyal. It agreed to buy the digital concierge service Velocity Black last year, pushing deeper into luxury markets dominated by American Express Co. and JPMorgan.

Discover has long focused on prime customers with better credit ratings, though it has historically shied away from the flashy sign-on bonuses and lavish perks used by many of its rivals.