Capital One Financial, one of Wall Street’s banking giants, announced its decision to acquire the American financial services company Discover for $35.3 billion in an all-stock deal. The deal will combine two of America’s largest credit card companies.

An All-Stock Deal

Under the agreed terms of the deal, Discover shareholders will receive 1.0192 Capital One shares for each of their existing unit holdings, offering them a premium of 26 percent on Friday’s closing price. Furthermore, at the closure of the deal, Capital One shareholders will hold 60 percent of the combined company, while Discover shareholders will have 40 percent ownership.

“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises and to build a payments network that can compete with the largest payments networks and payments companies,” the Chairman and CEO of Capital One, Richard Fairbank, said.

“Through this combination, we’re creating a company that is exceptionally well-positioned to create significant value for consumers, small businesses, merchants, and shareholders as technology continues to transform the payments and banking marketplace.”

Merger of Two Giants

Discover is one of the largest credit card issues in the US but behind the top three: Visa, Mastercard, and American Express.

The combination of Capital One and Discover would result in one of the largest financial services giants in the US, competing with JPMorgan Chase and Citigroup.

According to Capital One, the deal is expected to close in late 2024 or early 2025, depending upon regulatory approval. However, given the size of the deal, it is also likely to go through intense antitrust scrutiny.

“The transaction with Capital One brings together two strong brands with enhanced ability to accelerate growth and maximize value for our shareholders, enabling them to participate in the tremendous upside of the combined company,” Michael Rhodes, the CEO and President of Discover, said.