ATVI - What's In Your Wallet? How To Profit From Capital One's $35.3 Billion Acquisition Of Discover
2024-02-20 13:08:33 ET
Summary
- Capital One announced a deal to acquire Discover Financial for $35.3 billion in an all-stock deal.
- Today's market reaction has been positive for DFS stock and neutral for COF stock.
- Merger arbitrage, anyone? The deal presents an 11.1% premium for investors buying DFS stock that will be realized upon the deal closing, likely in late 2024 or early 2025.
Yesterday after market close, Capital One ( COF ) announced a monster deal to acquire Discover Financial ( DFS ) for roughly $35.3 billion. This represents 1.0192 COF shares for each DFS share (worth $139.56 per DFS share at current prices). In its press release, Capital One cited cost savings of $2.7 billion annually and a 20% IRR on the deal. The deal will create the largest credit card company in the US by loan volume and allow Capital One to issue its own credit cards. The initial market reaction was somewhat negative for COF stock, but the stock is now nearly flat since announcing the deal. DFS stock is up roughly 13% on the news. Both stocks are up nicely for the year....
What's In Your Wallet? How To Profit From Capital One's $35.3 Billion Acquisition Of Discover