Capital One Financial Corp. is exploring a possible acquisition of credit-card lender Discover Financial Services that may rank as one of many largest offers globally to this point this yr, individuals with information of the matter stated.
McLean, Virginia-based Capital One is working with advisers and has been holding talks with Discover a couple of deal, the individuals stated. Shares of Discover have fallen about 2% this yr, valuing the Riverwoods, Illinois-based firm at $27.6 billion, whereas Capital One has a market capitalization of about $52.2 billion.
If Capital One is ready to attain an settlement, an announcement might come as quickly as this week, the individuals stated. The deal would deliver collectively two storied consumer-finance manufacturers and create the biggest US credit-card firm by mortgage quantity, surpassing longtime rivals JPMorgan Chase & Co. and Citigroup Inc., based on information compiled by Bloomberg Intelligence.
Deliberations are ongoing and there’s no certainty they may result in a transaction, the individuals stated, asking to not be recognized as a result of the knowledge is personal. Representatives for Capital One and Discover didn’t instantly reply to requests for remark throughout a public vacation.
A purchase order of Discover may rank as one of many largest acquisitions globally this yr, Bloomberg-compiled information present. The prime deal to this point has been Synopsys Inc.’s roughly $34 billion acquisition of software program developer Ansys Inc. introduced in January.
Capital One is understood for its commercials that includes celebrities like Jennifer Garner and Samuel L. Jackson asking, “What’s in your wallet?” The firm, led by 73-year-old Chief Executive Officer Richard Fairbank, has traditionally catered to subprime customers who carry a stability on their playing cards every month.
In latest years, Capital One has been attempting to draw extra premium prospects that are typically heavy-spending and extra loyal. It agreed to purchase the digital concierge service Velocity Black final yr, pushing deeper into luxurious markets dominated by American Express Co. and JPMorgan.
Discover has lengthy targeted on prime prospects with higher credit score scores, although it has traditionally shied away from the flashy sign-on bonuses and lavish perks utilized by lots of its rivals.
Capital One is pursuing a deal following main declines in Discover shares within the second half of final yr, which got here after the corporate warned it had found some compliance lapses. The subject in the end led to the resignation of then-CEO Roger Hochschild.
Discover stated in January that its fourth-quarter revenue dropped 62% because it continued to grapple with the fallout. The firm halted buybacks final yr and has been looking for a purchaser for its student-loan enterprise. In December, Discover appointed Toronto-Dominion Bank’s Michael Rhodes as its new CEO, lining him as much as take over by early March.
Source: www.bostonherald.com”