Capital One Financial Corp. is considering a possible acquisition of credit card lender Discover Financial Services, in what would be one of the world's biggest deals so far this year, people familiar with the matter said. It will be done.
McLean, Virginia-based Capital One is working with advisers to discuss a deal with Discover, the people said. Discover's stock has fallen about 2% this year, valuing the Riverwoods, Illinois-based company at $27.6 billion, while Capital One's market capitalization is about $52.2 billion.
If Capital One reaches a deal, an announcement could be made as early as this week, people familiar with the matter said. The partnership brings together two prestigious consumer finance brands and creates the largest credit card company in the U.S. by loan amount, surpassing longtime rivals JPMorgan Chase & Co. and Citigroup Inc., according to data compiled by Bloomberg Intelligence. will be born.
Discussions are ongoing and it is unclear whether a deal will result, the people said, asking not to be identified because the information is private. Representatives for Capital One and Discover did not immediately respond to requests for comment over the holiday.
The Discover deal could be one of the world's biggest acquisitions this year, according to data compiled by Bloomberg. The biggest deal so far is Synopsys' acquisition of software developer Ansys for about $34 billion, announced in January.
prime customer
Capital One is known for its commercials in which celebrities such as Jennifer Garner and Samuel L. Jackson ask, “What's in your wallet?” The company, led by 73-year-old CEO Richard Fairbank, has traditionally catered to subprime consumers who carry balances on their cards every month.
In recent years, Capital One has sought to attract more premium customers, who tend to spend more and be more loyal. Last year, the company agreed to acquire digital concierge service Velocity Black, moving deeper into the luxury goods market dominated by American Express and JPMorgan.
Discover has long focused on prime customers with higher credit ratings, but has historically eschewed the flashy sign-on bonuses and lavish perks used by its customers. lots of those rivals.
Capital One is pursuing the acquisition after Discover shares fell sharply in the second half of last year after the company warned it had discovered several compliance deficiencies. was. The issue ultimately led to the resignation of then-CEO Roger Hochschild.
Discover said in January that Fourth-quarter profits fell 62% as the company continued to deal with the impact. The company suspended stock buybacks last year and is looking for a buyer for its student loan business. In December, Discover appointed Toronto-Dominion Bank's Michael Rose to its board of directors. new CEO, preparing to take over by early March.
