Capital One to acquire Discover Financial Services in $35.3 billion all-stock deal

Capital One Financial is set to acquire Discover Financial Services in a $35.3 billion all-stock deal.

Under the agreement, Discover shareholders would receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover’s Friday closing price of $110.49. The companies said they expect the deal to close in late 2024 or early 2025, after which Capital One shareholders would hold 60% and Discover shareholders would own 40% of the combined company.

The merger of the two companies, which are among the largest credit card issuers in the U.S., would expand Capital One’s credit card offerings and its deposit base. The company bought digital concierge service Velocity Black, a premium credit card and luxury market platform, in June of last year.

The Wall Street Journal reported that Capital One, which already uses Visa and Mastercard networks, plans to keep the Discover brand.

“Discover has done a better job of bringing in a lot of deposits and [has] access to a lot of institutions to run the debit card network and provide service. So it gives them a lot of deposit gathering ability, which particularly in the current market is enormously important,” said David Schiff, West Monroe’s head of consumer retail and banking.

CNBC has reached out Capital One and Discover for comment.

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There aren’t many parallels for similar acquisitions in the financial industry, meaning that the Capital One-Discover deal will likely have broad