Capital One-Discover: M&A activity worth up to $425B in 2024
Capital One (COF) is reportedly in talks to acquire Discover Financial Services (DFS) in an all-stock deal valued at $35 billion. It represents the latest in a wave of mergers and acquisitions, with global M&A activity reaching $425 billion in 2024 year-to-date according to a Bloomberg report — a 55% increase versus last year.
Of that $425 billion global total, $277 billion stems from deals announced in the United States alone, per Dealogic data.
Yahoo Finance's Julie Hyman and Josh Lipton break down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
JOSH LIPTON: You know what I think we should talk about today?
JULIE HYMAN: Let's talk about all the deals.
JOSH LIPTON: Deals. Deals, because we got a big one. Let's start with that. Capital One buying Discover. This is a $35 billion all stock deal, Julie. This would create, I'm reading here, the largest US credit card company by a loan volume. In terms of timeline, timeline expected to complete later this year, perhaps early 2025.
Capital One holders will own about 60% of the combined company. Now, whether that actually gets done, whether regulators really approve it, greenlight it, we'll wait and see. But certainly, we've had a few deals now, which is good news for deal makers.
JULIE HYMAN: Yeah. It's a good news, good news for deal makers. And there are also implications, may be, for the overall market vibe. Is this good for market confidence, for example? That's something that we can dig into. According to Bloomberg figures, if you look at the announced deals globally this year, we're looking at $425 billion, which is up 55% year over year for the same period of time.
Over at Dealogic we got them to crunch the numbers as well, looking at large deals exclusively, about $277 billion worth of deals announced just in the US this year. And if you look at deals overall, we're looking at the highest number in terms of deal value being announced since 2021. So anecdotally, yes, it feels like there are more deals, and it turns out there are actually more deals and larger deals that have pushed that deal value up this day, this year, so far.
And what's also interesting is, there have been a lot of predictions that deal, that deals were going to come back. But it has happened maybe a little bit more quickly than had been anticipated. Does this also tell us something about how comfortable companies are with the stability of the interest rate cycle, for example? Perhaps. But it's just an interesting development to watch.
JOSH LIPTON: Yeah. If you ask me, though Julie, if you asked me like, how do you think the M&A market is really going to shake out this year, I don't know if I could take a strong bet. Because as you were saying, there's certain tailwinds, we talk about the end of the Fed's rate hiking campaign, we think. Strong equity markets.
But on the other hand, if you were CEO and you're just looking at all the uncertainty still, about the economy, and geopolitical conflict, and elections, and also just a tougher regulatory backdrop. I mean, even this deal, Capital One, Discover, you're going to get regulators kicking the tires on that for sure.