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Capital One and Discover Shareholders Approve Acquisition Deal
One year (nearly to the day) after Capital One’s plans to purchase Discover Financial were announced, shareholders for both companies have given the transaction the green light.
About the vote and acquisition:
In a Special Meeting of Stockholders held on February 18th, the proposed transaction that will see Capital One acquiring Discover was approved. More than 99.8% of votes representing 85.1% of outstanding Capital One shares were in favor as were more than 99.3% of votes representing 81.6% of outstanding Discover shares.
While the approving vote is a major milestone for the merger and the purchase was approved by the Delaware State Bank Commissioner in December of last year, the deal is still subject to approval by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. Other customary closing conditions must also be met. Nevertheless, the companies expect the transaction to close “in early 2025.”
Capital One’s purchase of Discover is valued at approximately $35.3 billion and will be an all-stock transaction. This means that shareholders will receive 1.0192 shares of Capital One for each Discover shares owned. Notably, the purchase of Discover Financial not only includes the company’s credit card portfolio and banking services but also its payment network.
What they’re saying:
At the time that the transaction was announced last year, Capital One chairman and CEO Richard Fairbank said, “From Capital One’s founding days, we set out to build a payments and banking company powered by modern technology. 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.”
Similarly, the latest press release notes that the deal will bring together “two mission-driven companies with proven track records of delivering best-in-class solutions for consumers, small businesses, merchants and communities.”
My thoughts:
As mentioned at the top, this development comes just shy of a year after the deal was first revealed (the press release for that arrived on February 20th, 2024). Since then, though, it feels as though things have been fairly quiet. Moreover, as a customer of both companies, I still have questions about how their products could change post-merger (although Capital One does state that it plans to retain Discover credit card products and the brand overall).
While nothing is guaranteed, I do think this deal would have already been shut down if regulators didn’t intend to approve it. In terms of when they might do so, though, that remains to be seen. But, with Capital One and Discover still sticking to that “earl 2025” timeframe, I’m guessing we won’t have too much longer to wait for the deal to be sealed — and perhaps my questions will be answered shortly after that.
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