The stock price for Discover Financial Services was up almost 14% Tuesday afternoon after news that the credit card company would be acquired by Capital One.
Shares of Discover were trading at about $125 Tuesday at 2:25pm, after closing at around $110 on Friday. Meanwhile, Capital One stock remained mostly steady.
The all-stock deal announced Monday is valued at $35.3 billion, and the two financial institutions would form the largest credit card company by loan volume in the U.S., Bloomberg reported. Combined, the two companies have $257 billion in outstanding credit card loans, according to MarketWatch. The deal is also the largest merger so far in 2024.
“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,” Capital One CEO Richard Fairbank said in a statement.
The acquisition is expected to close later this year or early in 2025, pending regulatory and shareholder approvals at both institutions. It is also unclear if regulators will approve the merger.
“The deal also poses massive anti-trust concerns, given the vertical integration of Capital One’s credit card lending with Discover’s credit card network,” Jesse Van Tol, president and CEO of National Community Reinvestment Coalition, told the Associated Press.
If the deal closes, Capital One’s shareholders would own 60% of the company, while Discover’s shareholders would own about 40%.