Capital One Considering Acquisition of Discover Financial
Here’s some unexpected news in the world of credit cards. Capital One is looking to acquire Discover Financial Services in a deal that would merge two of the largest credit-card companies in the U.S.
Capital One ranked fourth in the list of U.S. credit card issuers in 2022, after Chase, American Express and Citi. It rang up $534.5 billion in credit card transactions that year. Discover is sixth in the rankings, after Bank of America, with $210.7 billion in credit card transactions.
Capital One has been improving its credit card offerings in recent year with popular business cards which now include the Venture X Business card, and the consumer Venture X card. Discover on the other hand offers several credit card options, with the Discover it card being the most popular as it has no annual fee and earns up to 5% back.
The all-stock deal could be announced Tuesday, according to people familiar with the matter, as reported by WSJ. Discover has a market value of $28 billion, and the takeover would be expected to value it at a premium to that.
In January, Discover and Capital One reported declines in fourth-quarter profits of 62% and 43%, respectively, as banks increased provisions for losses from bad loans as rising interest rates raised the risk of consumer defaults on credit card debt and mortgages. Discover Financial has a market capitalization of $27.6 billion, while Capital One is valued at $52.2 billion.
Credit: Source link
