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Capital One Financial Corp. (COF) has announced its intention to acquire Discover Financial Services (DFS) in a $35 billion deal.

This strategic acquisition positions Capital One as the largest credit card company in the United States by loan volume, intensifying competition with Wall Street’s prominent players.

Under the terms of the agreement, Capital One will purchase Discover at a premium, offering 1.0192 of its own shares for each Discover share—a 26.6% premium based on the closing price on February 16th.

Pending regulatory and shareholder approvals from both entities, the deal is anticipated to conclude in late 2024 or early 2025.

The merger between Capital One and Discover represents the most significant global consolidation this year, surpassing notable acquisitions in various sectors.

By combining forces, Capital One and Discover unite two esteemed consumer-finance brands, effectively eclipsing competitors such as JPMorgan Chase & Co. and Citigroup Inc. in US credit-card loan volume.

This acquisition not only amplifies Capital One’s market share but also grants the company a formidable position within the payment networks sphere.

Capital One’s CEO, Richard Fairbank, described the merger as a “singular opportunity” to establish a robust presence alongside the largest payment networks, underscoring the transformative potential of the deal.

Upon completion, Capital One shareholders will possess approximately 60% ownership of the consolidated entity, with Discover shareholders owning the remaining stake.

The acquisition is expected to yield significant synergies, generating $2.7 billion in pretax benefits.

The strategic rationale behind the acquisition underscores the increasing importance of scale and technological capabilities in the financial sector.

By leveraging Discover’s extensive network and Capital One’s expertise, the combined entity aims to drive innovation and enhance value for customers in an ever-evolving market landscape.

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