Capital One (ticker symbol: COF) has agreed to acquire Discover Financial Services (ticker symbol: DFS) in an all-stock deal that will integrate the two largest U.S. credit card companies for a total of $35.3 billion.。Under the agreement, the shareholders of Discover may exchange each share of Discover for 1.0192 shares of Capital One, versus 26 of Discover's closing price on Friday.6% Premium。

The acquisition is expected to close in late 2024 or early 2025, pending regulatory approval.。Upon completion of the transaction, Capital One shareholders will own approximately 60% of the combined company, while Discover shareholders will own approximately 40%。The combined entity will be the sixth-largest U.S. bank by assets and is expected to generate $2.7 billion in pre-tax synergies.。

The merger is expected to reshape the credit card industry, with more U.S. credit card loans than JPMorgan Chase & Co..and Citigroup Inc.Such as competitors。However, the deal is likely to face intense regulatory scrutiny, particularly given the current administration's focus on the issue of competition in the U.S. credit card market and the Consumer Financial Protection Bureau's recent proposal for stricter rules on credit card fees.。

With an eye on the subprime consumer, Capital One has been refocusing its business to attract more high-end customers, while Discover has traditionally focused on major customers with better credit scores.。The acquisition comes after Discover's share price fell significantly in the second half of last year, in part because of legal issues that led to the resignation of then-CEO Roger Hochschild.。