Capital One Financial\u2019s application to acquire Discover Financial Services in a $35.3 billion all-stock deal has officially been approved by the Federal Reserve and the Office of the Comptroller of the Currency, the regulators announced on Friday.<\/p>\n
\u201cThe Board evaluated the application under the statutory factors it is required to consider, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal,\u201d the Fed said in a release.<\/p>\n
Capital One first announced it had entered into a definitive agreement to acquire Discover in February 2024. It will also indirectly acquire Discover Bank through the transaction, which was approved by the Office of the Comptroller of the Currency on Friday.<\/p>\n
Under the agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share or about a 26% premium from Discover\u2019s closing price of $110.49 at the time, Capital One said in a release.<\/p>\n
Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will expand Capital One\u2019s deposit base and its credit card offerings. <\/p>\n
As a condition of the merger, Capital One said it will comply with the Fed\u2019s action against Discover, according to the release. The Fed fined Discover $100 million for overcharging certain interchange fees from 2007 through 2023, and the company is repaying those fees to affected customers.<\/p>\n
The OCC said it approved Capital One\u2019s application on the condition that it would take \u201ccorrective actions\u201d to remediate harm and address the \u201croot causes\u201d of outstanding enforcement actions against Discover.<\/p>\n
After the deal closes, Capital One shareholders will hold 60% of the combined company, while Discover shareholders own 40%, according to the February 2024 release.<\/p>\n
In a joint statement, Capital One and Discover said they expect to close the deal on May 18.<\/p>\n<\/p>\n
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