Capital One pens $35 billion deal to buy competitor Discover

The agreement would bring together two of the country’s largest credit card companies by the end of this year or early next year, according to a joint statement the companies released Monday. Under the all-stock agreement, Discover Financial Services shareholders would receive 1.0192 Capital One Financial shares for each Discover share—a significant premium at Friday’s prices for both stocks—and own 40 percent of the combined company. Three Discover board members will join the new board of directors after the deal is finalized.

What happens next? The proposed agreement requires federal regulators’ approval when the White House has called for increased scrutiny of such deals to promote competition. In 2021, President Joe Biden signed an executive order that required bank regulators and the U.S. Department of Justice to review acquisition and merger agreement plans. The Consumer Financial Protection Bureau is also scrutinizing credit card companies more heavily, and last year, it proposed a new rule to restrict credit card late fees.

Dig deeper: Read Kristen Waggoner’s column in WORLD Opinions about how some big banks discriminate against customers based on their beliefs.