The American lender Capital One Financial Corp, supported by Warren Buffett, is ready to buy a Discover Financial Services in a $ 35 billion deal, bringing two of the two largest credit card firms together and allowing them to compete with other Wall Street Beamoths.
Here you have to know about the acquisition of capital forest and what can it mean for consumers:
- Why does Capital One want to buy?
- What would be the meaning of sales?
- What is the price of the share of companies?
- Will I get a new credit card?
- How do capital forest and discover credit cards vary?
- Will regulators approve sales?
Why does Capital One want to buy?
The deal brings together two stored consumer -itated brands, a combination that rivals to JPMORGAN Chase & Co. And Citigroup Inc. The US Credit-Card will cross by the loan volume. This payment will also give a leg to Capital One in the network world.
Capital One CEO Richard Fairbank said that the acquisition is a “unique opportunity” to bring two companies together that can compete with the largest payment network.
There is also an opportunity for the discovery of acquisition. In January, the company recorded a decline of 62% in the fourth quarter profit, as it was a result with compliance and risk-management, causing its CEO to resign last year.
Ben Elliot of Bloomberg Intelligence said the deal time “opportunistic, Discover’s legal overhang and weak 2024 approach.”
What would be the meaning of sales?
Tie-up is set to shake the credit card landscape in the US and the acquisition is one of the largest deals in the industry since the 2008 financial crisis.
Discover is the smallest in four US-based payment networks, with Visa Inc., American Express Company and MasterCard Inc. Capital One has to partner with visas and master cards historically to issue its cards. With the Discover, it can make both those payments out of the mixture.
What is the price of the share of companies?
Discover shares collapsed last month after the company’s fourth quarter gained profit. The stock has been received since then and after the announcement of the deal, premarket trading increased by 18% on Tuesday. Capital forest fell nearly 4%. Capital One offer for Discover represents 26.6% premium to discover the closure on 16 February.
Will I get a new credit card?
This is not completely clear at this time. The deal should allow the capital forest to rely on its network for at least some of its credit cards, historically depending on the visa and master card for that service. But companies have not yet said whether they will keep all their existing products or choose to roll out new cards.
How do capital forest and discover credit cards vary?
Both companies offer a variety of credit cards. Discover has mainly cash-back cards, while Capital One offers several reward cards.
Capital One is known for its advertisements, with Jennifer Garner and Samuel L. Celebrities like Jackson specialize, “What’s in your wallet?” The company has historically subpreated to consumers who balance their cards every month.
Last year, it agreed to buy Digital Conservices Service Velocity Black to better complete prime customers, which do not do a balance and prioritize credit-card points and airlines miles instead.
On the other hand, the Discover, has long been focused on major customers with a better credit rating that select to carry a balance-a group known as a revolver in industry parlus-and has gone away from attractive sign-on bonuses and magnificent perks used by many of its rivals.
Will regulators approve sales?
The deal is pending the required regulatory approval at the end of 2024 or early 2025. Given the size of the deal, Bloomberg Intelligence is expected to “significantly investigate”. The administration of Biden is also becoming difficult to promote competition in the sector.
But analysts believe it will create more competition for visas and master cards. It can help the capital forest and find wheels with regulators and obtain approval for the deal as antitrust regulators have long placed those payments in their crosshare.
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