CNBC Overtime’s Post

💳“Capital One said it will buy Discover Financial Services for more than $35 billion, a deal that will marry two of the largest credit-card companies in the U.S. Under the terms of the all-stock deal, Discover shareholders are set to receive 1.0192 Capital One shares for each Discover share, representing a premium of about 27% based on Discover’s closing price Friday. After the deal closes, Capital One shareholders will hold roughly 60% of the combined company, with Discover shareholders owning the rest.” 💳”Buying Discover would give Capital One, a credit-card lender with a market value of a little over $52 billion, a network that would vastly increase its power in the payments ecosystem…Though much smaller than Visa and Mastercard, Discover is one of the few competitors to those companies in the U.S. and it is one of a small number of card issuers that also has a payments network.” 💳”For Capital One, the deal would also further expand the number of cardholders it will count as customers for its credit-card lending business. Many Discover cardholders have high credit scores. Discover also has consumer deposits, most of which are in savings accounts, allowing Capital One to continue to grow its already large presence in that area.” 💳“An acquisition of Discover will rank among the biggest deals so far in 2024. After a lull in M&A activity in 2023 as economic and other uncertainty and increased interest rates took a bite out of the appetite for deals, volumes have gotten off to a relatively strong start and are up 90% in the U.S. compared with a year earlier, according to Dealogic.” Source: WSJ #mergersandacquisitions #deals

CapOne has decided to buy Discover Financials for more than $35 billion, subject to regulatory approval by late 2024 or early 2025. During current times, Credit Card Industry is on a boom, however, robust technology with adequate controls can help it keep NCO/ delinquencies in check and not get out of hands. With this merger, following outcomes are likely to happen: 1.    # by Asset Size – CapOne is #9 today with 259 physical branch locations, 55 “CapOne Cafes”. It will move to become #6. Discover brings market value of over $52 billion, with deep power of payments ecosystem. It has only 1 physical branch in Delaware. 2.    Central role in Payments Industry – CapOne is #4 Credit Card Issuer in US and has mostly used MasterCard and Visa. It also is #3 in terms of Mastercard cards after Citi and BoA. It has constant learnings from years of data through AI. This move will bring CapOne at the forefront in Payments Industry with ownership of Payments Network like MasterCard, Visa and AmEx. It will have the opportunity to renegotiate the Merchant Interchange fees (fees charged by Network for every transaction) based on the categorization and economic pull by the merchant. Like AmEx and Others, it will innovate newer network products in the future for the merchants and beyond. 3.    Product Innovation & Growth – US Consumers typically like reward programs which is transparent and provides multiple options – cash back, points-based redemption options through marketplace. Discover has customers with high credit scores, and consumer deposits in savings accounts which provides leverage with LDR. Discover typically provides Cash back offers. This move will enable advanced personalized loyalty offers to individuals based on their lifestyle and redemption pattern. While the current CapOne’s footprint is only with Mastercard & Visa, newer products need to be launched with refreshed value prop on Discover Network. 4.    Optimized Cost-to-Income Ratio – CapOne is a data and tech company with advanced AI capability and modern tech powered by Cloud mostly AWS. With this M&A, several common capabilities will be rationalized and only the complementary capability will be kept as strategic assets. Data assimilation is the key component with PB of data coming in, hence there is many opportunities to expand on the snowflake investments that CapOne has embarked on. Overall, this should result in optimized cost-to-income ratio. 5.    AIFirst Investments – CapOne will continue to invest heavily in AI and Gen AI first initiatives to develop additional foundational frameworks and capabilities which help correlate pattern across the 2 organizations, reduce Operational efficiency, reduce NCO/ delinquency and create additional personalized offers and products for consumers, reduce MRAs and compliance gaps with pattern-based handling on Eligibility and Fulfillment or inaccurate merchant classification. #aiadvancement #mergersandacquisitions #paymentsinnovation #capitalone

Capital One's acquisition of Discover Card is a big bet on current economic and societal trends. The deal offers Capital One a greater share of card issuance and ownership of its own payment network to compete with Mastercard/Visa. But what's most profound is the doors this move opens for Capital One. They will expand their presence nationally and innovate to reach consumers with new forms of digital payments or more robust reward card offerings. Research from a consumer and competitive standpoint will drive these moves, and I look forward to seeing their strategy unfold. #competitiveintelligence #Fletcher #capitalone #whatsinyourwallet Source: https://lnkd.in/gGhUWm8N

“Credit card usage has soared in recent months as Americans try to keep up with inflation.” This from an article covering the Discover Financial Services deal in the Washington Post, which typically downplays inflation. Hey Washington Post, this acquisition is not due to inflation. It’s the outcome of a honed #strategy and it’s a great move by #capitalone and #discover And Discover shareholders get a little over one share of Capital One for every Discover share they own — a 26.6 percent premium from Discover’s closing share price of $110.49 on Friday. Regulators gonna regulate?? #banking #fintech #payments #finserv #creditcards #debitcards #distribution #marketing #newsalert #leadership

"Warren Buffett-backed U.S. consumer bank Capital One plans to acquire U.S. credit card issuer Discover Financial Services in an all-stock transaction valued at $35.3 billion to create a global payments giant, the companies said on Monday. The deal, which is expected to receive intense antitrust scrutiny, would form the sixth-largest U.S. bank by assets and a U.S. credit card behemoth that would compete with rivals JPMorgan Chase and Citigroup. While Discover has a network that spans 200 countries and territories, it is still much smaller than rivals Visa, Mastercard and American Express. 'This acquisition adds scale and investment, enabling the Discover network to be more competitive with the largest payments networks,' the companies said in a statement. Discover shareholders will receive 1.0192 Capital One share for each Discover share, representing a 26.6% premium over Discover's closing price on Friday." #capitalone #discover #creditcards #mergersandacquisitions #finance #corporatefinance #equipmentfinance #equipmentleasing #financialservices https://lnkd.in/gXhdjW6C

Good morning LinkedIn! In what would be one of the first monumental deals of 2024, Capital One and Discover are aiming to join forces to take market share away from VISA, American Express and Mastercard. The deal would give Capital One access to Discover’s so-called payments network.  A payments network is a communication system that connects banks with businesses—from large retailers to mom-and-pop shops—to process purchases customers make with credit or debit cards. Discover is one of the few credit-card companies in the U.S. aside from Visa and Mastercard operating a payments network. Capital One expects the deal to close in late 2024 or early 2025, pending approval by regulators and shareholders of each company. Some interesting movement here potentially - how will this impact the marketplace and the outlook for 2024? A great read from the WSJ here! #astoncarter #acaccountingandfinance #mergersandacquisitions #capitalone #discovercard #marketplace Alexa KeeganVinny VonelliRobert KochJohn RemmeyStephen GrayJess ManyokyDaniel FuimanJacob Votta

Capital One and Discover💳 It's no secret that Capital One looks to acquire Discover Financial Services in the near future. As announced on Feb 19, "Under the terms of the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a premium of 26.6% based on Discover's closing price of $110.49 on February 16, 2024. At close, Capital One shareholders will own approximately 60% and Discover shareholders will own approximately 40% of the combined company." Discover currently holds a BBB- rating while Capital One holds a BBB rating as of 3/21/2024. Link: https://lnkd.in/g_Xi7nE9 Given my hyper-fixation on the potential merger, I've compiled a list of pros and cons/risks/concerns that I've read if the deal were to go through. (These are all loose theories based off of light research, so take my critiques with a grain of salt). PROS: - Competition in Credit Card Landscape - Enables Capital One to leverage its customer base, tech, and data ecosystem to drive more sales for merchants and deals for consumers. "The merger could result in its expansion, providing more competition to Visa and Mastercard, which are sometimes referred to as a duopoly," - Ian Katz - Allows Discover to go international (currently limited to America) - Potential rewards expansion. There's potential that this merge could cause the rewards to decline or overall worsen, but here's hoping that Discover's cashback rewards only get better post-merge. Ryan Flanigan's analysis is promising on this front, though. “The precedent is already in place for a mechanism like this with flexible points,” he continues. “Chase and Citi already allow you to combine points from one card to another to maximize your value. Capital One also already lets you combine cash back from a Spark cash back card to a Venture card, so that would just need to be expanded to include the Discover cards.” - Ryan Flanigan CONS: - Current customers of Discover have heavy criticisms and concerns related to whether Discover's customer service and overall accommodation and fee-free services will remain consistent post-merge - The company has announced that all Capital One debit cards will eventually be switched to Discover debit cards. This can be a pro as well, since some people, such as Flanigan, believe that Discover has a superior debit option, but it can also be a con. "The best move would be to move their debit cards to the Discover network to take advantage of this. However, the merger could change whether these terms continue to apply, so it bears watching." - Ryan Flanigan Customers may dislike changing platforms, or it will force those who wish to stay with their current Visa / Mastercard to pay a fee to maintain it (and not have to transfer). #finance #stocks #creditrating #businessinsight #merger #acquisition #MA

And just like that, the credit card industry has undergone a seismic shift with Capital One's announcement of its acquisition of Discover Financial Services. While Discover's stock has been recovering, it was still seen as too much of a bargain to overlook. What does this mean for the industry? With Capital One's move, they get their own closed loop and on a larger scale than either Cap One or Discover can achieve alone. Furthermore, there may be more competitive pressure on rewards and card benefits if Capital One chooses to enrich its value to cardmembers. We may expect richer Venture card rewards or even a whole new premium product launch. Visa may lose out the most in the short-term as Capital One shifts its card base and associated spend to its own network as contractual agreements with Visa expire. However, the whole industry could see unexpected discount rate erosion depending on how quickly Capital One looks to expand its network. It's going to be an interesting time in the credit card industry over the next few years assuming regulatory approval of the acquisition. https://lnkd.in/eVQ47b_7

🚀🔥 Wow, what a bombshell in the financial world! 🚀🔥 Capital One's acquisition of Discover Financial is shaking up the credit-card sector. With a 27% premium on Discover’s closing price, Capital One is seizing the opportunity to expand its digital capabilities at a booming time in the industry. By acquiring Discover's network, Capital One aims to supercharge its presence in the digital payments arena, potentially reshaping how transactions are processed and fees are set. This bold move positions Capital One to become a formidable competitor to industry giants like Visa and Mastercard. This ultimately can be a healthy thing - As we witness these seismic shifts in the financial landscape, it's a reminder for us all to stay flexible and adapt to change. Let's not allow ourselves to be bogged down by the uncertainty but rather embrace it as an opportunity for growth and innovation. Credit: AnnaMaria Andriotis & Lauren Thomas, The Wall Street Journal #CapitalOne #DiscoverFinancial #Finance #DigitalPayments #Acquisition #CreditCards #BusinessNews https://lnkd.in/gCT8gm6b

World of cards seems have great future! Deal is Obvious and looks promising in all aspects The recent deal involves Capital One acquiring Discover Financial Services Financial in an all-stock transaction valued at $35.3 billion. Here's a breakdown of the key structural details and statistics: Deal type: Acquisition Buyer: Capital One Financial Corporation (COF) Target: Discover Financial Services (DFS) Transaction value: $35.3 billion Consideration: All-stock, with Discover shareholders receiving 1.0192 Capital One shares for each Discover share Premium: 26.6% premium to Discover's closing share price on February 16, 2024 Ownership post-deal: Capital One shareholders will own approximately 60% of the combined company, and Discover shareholders will own approximately 40% Regulatory approval: The deal is still pending regulatory approval #Deal #Acquistion #discover #Visa #Mastercard #Rupay #creditcards