Capital One and Discover merger approved by Federal Reserve
Capital One Financial has received approval from the Federal Reserve and the Office of the Comptroller of the Currency for its $35.3 billion all-stock deal to acquire Discover Financial Services. This acquisition will see Capital One expand its deposit base and credit card offerings by indirectly acquiring Discover Bank.
The Federal Reserve stated that they evaluated the application based on factors such as financial resources, managerial capabilities, community needs, and competitive impacts. Capital One first announced the acquisition in February 2024, with Discover shareholders set to receive 1.0192 Capital One shares for each Discover share, representing a 26% premium.
As part of the deal, Capital One will comply with the Fed’s actions against Discover, including a $100 million fine for overcharging interchange fees from 2007 to 2023. The OCC has also approved the acquisition on the condition that corrective actions are taken to address outstanding enforcement actions against Discover.
Upon completion of the merger, Capital One shareholders will own 60% of the combined company, with Discover shareholders holding 40%. The deal is expected to close on May 18, according to a joint statement from Capital One and Discover.
The acquisition will position Capital One as a major player in the credit card industry, allowing it to better compete with other leading issuers. This move signifies a significant development in the financial services sector and highlights Capital One’s commitment to growth and innovation.
