In late February, US bank Capital One announced its plans to acquire payment processing network Discover Financial Services, in a $35.3 billion all-stock transaction.
Discover Financial Services is a prominent American financial services company, best known for its credit card brand, Discover Card, introduced in 1986. It is the fourth-largest credit card company in the US, surpassed only by Visa, American Express, and Mastercard.
Capital One is simultaneously one of the biggest US banks as well as a major American issuer of credit cards.
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Before Capital One’s $35 billion bid, JPMorgan Chase spent a year in talks about a possible deal with Discover Financial, the Financial Times could reveal.
If the merger succeeds, Capital One shareholders will own 60% of the joined company, while Discover Financial shareholders will own 40%, Global Finance reports.
The deal is expected to close in late 2024 or early 2025.
Supporters of the merger argue that it will benefit consumers by offering massive networks like Mastercard and Visa stronger competition.
Critics, however, have argued that the merger presents risks to small businesses and consumers alike and that it may negatively impact competition.
The Guardian reports that more than a dozen advocacy groups penned a letter to urge regulators to block the merger, considering it “dangerous” and “illegal”.
Opponents fear that the deal would threaten to reduce competition within the financial services sector, lead to a hike in fees, and put an undue risk to the stability of the US financial system as a whole.