(DailyDig.com) – On February 19, Capital One announced its intention to purchase Discover through a stock transaction. According to their press release, the deal must be approved by both company stockholders and survive a regulatory approval process. The merger is expected to occur near the end of 2024 or the beginning of 2025 once approved.
Chairman Richard Fairbank, CEO and founder of Capital One, stated that their combined companies will complement each other and strengthen their abilities to compete with some of the larger payment networks. He said they will have a successful and robust business with their combined credit card and other banking services, which will make them more competitive in the global banking network.
Fairbank also stated that he expects this deal to create extraordinary value for the stockholders as well as for the company’s customers, merchants, and businesses that work with them.
The CEO of Discover, President Michael Rhodes, stated that the combination of the two strong company brands will create increased opportunities in business for their stockholders and consumers.
Also, both companies promote the ESG ideology (environmental, social, and governance) as a goal for their employees. They aim to improve people of color and women’s representation in the leadership roles of their companies.
Speculation from financial experts has discussed possible changes, with some questioning whether the companies will keep their individual identities as it relates to their names and card brands. Alvin Carlos, a District Capital Management partner, believes that they will not change their deposit rates as they are currently competitive. According to him, they will also likely keep their online savings at their current high yield rate.
The stock transaction deal, which is valued at over $35 billion, will include the acquisition of Discover stockholders’ shares at over one share, 1.0192, of Capitol One for every share of Discover. This is based on the closing price on February 16, which was $110.49. This would give Capital One stockholders sixty percent of the merged company, and Discover stockholders would hold forty percent, per the press release.
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