Priya PatelTLDR:
- Capital One is planning to acquire Discover Financial Services in a deal worth over $28 billion.
- Both companies reported declines in fourth-quarter profits, prompting the potential merger.
Article Summary:
Capital One, a major credit card issuer, is set to acquire Discover Financial Services in a deal that could be announced as early as Tuesday, with a reported valuation expected to exceed $28 billion. This potential merger comes after both companies reported declines in fourth-quarter profits due to increased provisions for losses from bad loans as a result of rising interest rates. The merger would significantly expand Capital One’s presence in the financial services sector.
Discover has previously explored selling its student loan business and agreed to improve consumer compliance following a regulatory review in mid-2007. The company has appointed a new CEO, Michael Rhodes, to lead the business. The news of the merger led to an increase in both companies’ stock prices last week.
With Capital One being a major credit card issuer in the U.S., the potential acquisition of Discover would allow the company to offer cards through the Discover network while maintaining the Discover brand on its cards and network. This move could potentially open up new opportunities for Capital One in the financial services market.
