Capital One buying Uncover Monetary Providers, report says

Capital One Financial is about to amass Discover Financial Services, in response to a report from The Wall Street Journal. The deal might be introduced Tuesday, the outlet mentioned, citing sources.

Will probably be an all-stock deal and Capital One, which already makes use of Visa and Mastercard networks, plans to maintain the Uncover model, the Wall Avenue Journal mentioned.

“Discover has done a better job of bringing in a lot of deposits and [has] access to a lot of institutions to run the debit card network and provide service. So it gives them a lot of deposit gathering ability, which particularly in the current market is enormously important,” mentioned David Schiff, West Monroe’s head of client retail and banking.

CNBC has reached out for remark from each Capital One and Uncover.

The merger of the 2 corporations, that are among the many largest bank card issuers within the U.S., would develop Capital One’s bank card choices and its deposit base. The corporate purchased digital concierge service Velocity Black, a premium bank card and luxurious market platform, in June of final yr.

There aren’t many parallels for related acquisitions within the monetary business, that means that the Capital One-Uncover deal will seemingly have broad implications for merger exercise inside the sector, mentioned Schiff.

“It’s a good example of the risk we’re seeing in the market, where the competing interests from regulators for increased control and rigor balance against the competitive demands that are being made quite clearly, in terms of the overall market,” Schiff mentioned.

The deal comes amid a interval of accelerating strain for Uncover, together with regulatory scrutiny and new leadership. The present CEO Michael Rhodes was introduced in December 2023.

Shares of Uncover are down 1.7% decrease for the yr, placing the corporate at a $27.63 billion market cap. Capital One has a market cap of $52.2 billion and shares of the corporate are up 4.6% in 2024.

Bloomberg Information reported on Monday that Capital One was contemplating the Uncover acquisition.

The Capital One-Uncover merger can be one of many largest offers introduced thus far this yr. Synopsys introduced a deal to purchase Ansys for $35 billion in January and Diamondback Energy‘s $26 billion deal to purchase privately held oil and gasoline producer Endeavor Energy was introduced on Feb. 12.

Learn the complete story right here: Capital One is buying Discover Financial, sources say