Business Case Studies & Business Publications

Capital One’s Acquisition of Discover Fi...

Allayannis, George...

Case

Capital One’s Acquisition of Discover Financial Services

Allayannis, George (Yiorgos); Agarwal, Anubhav; Sesia, Aldo

F-2101 | Published June 27, 2025 | 26 Pages Case

Collection: Darden School of Business

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This case study examines Capital One Financial Corporation's acquisition of Discover Financial Services, analyzing the strategic, financial, and industry-level implications of one of the largest mergers in the history of consumer finance. It provides an overview of Capital One’s evolution from a monoline credit card company to a diversified financial services institution and describes Discover as a credit card issuer and payment-network operator. To give context to the deal, the case explores the credit card industry, focusing on its competitive dynamics, major players, revenue models, and regulatory pressures. The case also describes how value is captured by the various parties in the credit card payment ecosystem, including issuers, networks, and merchants. The case concludes with an in-depth look at the deal terms of the acquisition, assessing the strategic rationale, expected synergies, regulatory challenges, and potential risks. It invites students to evaluate key metrics of the deal such as the impact on the tangible book value (TBV) per share and earnings accretion/dilution.

• To discuss a recent M&A transaction and its strategic and financial rationale • To analyze potential synergies on the cost and revenue side • To examine the role of regulatory issues in an M&A transaction • To estimate the earnings accretion/dilution of the transaction and the impact on the TBV per share