Capital One deal for Discover has $1.38B termination fee (NYSE:DFS)
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Capital One’s (NYSE:COF) planned $35 blillion acquisition of Discover Financial Services (NYSE:DFS) includes a $1.38 billion termination fee.
The merger agreement provides termination rights for both Capital One (COF) and Discover (DFS) and a termination fee of $1.38 billion in the event of an alternative acquisition proposal or changes in the recommendation of the other parties board, according to an 8-K filing on Thursday.
Capital One (COF) and Discover (DFS) are not required to pay a breakup fee if regulators block the deal.
Capital One (COF) confirmed on Monday that it agreed to acquire Discover Financial Services (DFS) in a stock-based deal valued at $35.3B, which will create the largest U.S. credit card company by loan volume.
The deal has a termination date of Feb. 19, 2025, that’s extendable through May19.
Analysts expect regulators will give the transaction a close look as it has been years since there’s been a bank merger this big, excluding forced acquisitions of failing banks. At Dec. 31, the two companies had a total of $257B of credit card loans outstanding, exceeding J.P. Morgan Chase’s (JPM) $211B.
Already several politicians including
Congresswoman Maxine Waters (D-CA) and Sen. Elizabeth Warren (D-MA) have come out against the deal, saying that regulators need to block it. On Wednesday, Axios reported that Sen. Josh Howley (R-MO.) also wants the Biden administration to block the combination.
