UPDATED - Capital One to Acquire Discover Financial in a Landmark $35.3 billion All-Stock Deal

Capital One Financial is poised to reshape the credit card industry with its impending acquisition of Discover Financial Services, according to inside sources.  The landmark $35.3 billion deal, which was announced early Tuesday, promises to shake up the competitive landscape.

Discover shareholders will receive a 26% premium, exchanging each Discover share for 1.0192 Capital One shares. The deal, expected to close in late 2024 or early 2025, will result in Capital One shareholders owning 60% of the combined company, and Discover shareholders owning 40%.

The all-stock transaction will significantly expand Capital One's already vast credit card portfolio. Industry reports indicate that Capital One intends to retain the well-recognized Discover brand, even as it leverages Discover's network alongside existing partnerships with Visa and Mastercard.

This transformative move comes after recent speculation surrounding Capital One's interest in acquisitions. It also follows Capital One's purchase of Velocity Black last year, a move signaling the company's intent to broaden its premium card offerings.

Discover's market capitalization currently stands at $27.63 billion, with shares experiencing a slight downturn this year. In contrast, Capital One boasts a $52.2 billion market cap and has seen its shares rise throughout 2024.

The Capital One-Discover tie-up would represent one of the year's most significant business deals, joining major transactions like the Synopsys-Ansys merger and Diamondback Energy's purchase of Endeavor Energy.

Experts anticipate this merger will bring substantial changes to the credit card sector. Further details of the deal will be revealed once the official announcement is made.