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. The regulators announced the approval on Friday, citing factors such as financial and managerial resources, community needs, and competitive impacts.
The acquisition, announced in February 2024, will see Capital One indirectly acquire Discover Bank as well. Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a 26% premium from Discover’s closing price at the time of the agreement.
Capital One and Discover are both major credit card issuers in the U.S., and the merger is expected to expand Capital One’s deposit base and credit card offerings. As part of the deal, Capital One will comply with the Fed’s action against Discover, which includes a $100 million fine for overcharging certain interchange fees. Discover is repaying those fees to affected customers.
The OCC approved Capital One’s application with the condition that corrective actions be taken to address outstanding enforcement actions against Discover. After the deal closes, Capital One shareholders will hold 60% of the combined company, with Discover shareholders owning 40%. The closing date is set for May 18, according to a joint statement from Capital One and Discover.
In a statement, Capital One and Discover expressed their commitment to competition in the financial services industry. The deal is expected to enhance their ability to serve customers and offer innovative solutions.
