Why Discover Financial Is Charging Higher Today
Capital One Financial (NYSE: COF) has a deal in place to acquire Discover Financial Services (NYSE: DFS) at a significant premium. Discover shareholders are celebrating, as the market sent shares up by 11% as of 10 a.m. ET.
Capital One and Discover are two giants of the banking industry, but they have taken very different approaches to the lending business. Capital One began its life catering to people who have traditionally had trouble securing credit, but as it has grown, it has been trying to broaden its share of prime, or lower-risk, customers. That segment has always been Discover's focus.
Late Monday, Capital One announced plans to acquire Discover in a deal that values the target at $35.3 billion. Terms of the deal call for each Discover share to be exchanged for 1.0192 shares of Capital One. Based on Friday's closing prices, that puts a premium of about 26.6% on Discover.
Source Fool.com
